Crisis, Disaster and the Significance of Effective Management
Introduction
Crisis and disaster are often understood as similar terminologies. Literatures have stressed that these are terns with different concepts. However, in spite of their differences, it has also been stressed that preparedness and effective management is an essential key in overcoming either disaster or crisis. From this it is emphasized that crisis and disaster do share certain similarities, particularly in managing their effects. In this paper, focus will be on the differentiation of disaster from crisis. How crisis can occur in the organizational setting will also be described. Finally, means of addressing organizational crisis will be cited in the latter part of the discussion.
Disaster and Crisis
According to , and (2003), disaster and crisis are often used interchangeably. Both terms have their distinct features, but they are also similar in a way, as they lead to related events. In particular, a disaster that is caused by human error in an organization may lead to the development of an industrial crisis. There had been no official definitions for both terms; however, several organizations and authors have cited their understanding of either term. For instance, disaster has been defined as an overwhelming disruption that suddenly injures or kills a large number of people.
CRED or the Center for Research on the Epidemiology of Disasters on the other hand defined disasters as exceptional events that require external assistance. The word disaster is actually taken from combined Latin terms dis (bad) and astrum (star); this is based on the conventional belief that dreadful incidents happen when the stars are badly positioned. Disasters can also be categorized into two types: natural and man-made. Earthquake, flood, tsunami and volcanic eruption are some common examples of natural disasters whereas man-made disasters can be in the form of civil disorder, war or terrorism ( & , 2002). When a number of disasters occur and remain uncontrolled, a crisis may rise.
Compared to disaster, the impact of a crisis may be greater, particularly in terms of losses. Crisis may then occur due to financial threats, physical disasters, technological failures, security leaks and other similar examples. While disaster and crisis may be related, there are also some differences. For instance, while both disaster and crisis are considered unpredictable events, crises are not unexpected events (, 1999). This suggests in general, plans to counter crisis can be done ahead of time. As several mismanaged disasters lead to the formation of a crisis, multiple factors are necessary in order to trigger a crisis from happening; thus, in terms of lifespan, crisis often affect people longer than disasters as several issues would have to be addressed to resolve it (, 2004). Within a small environment such as an organization, crisis may also occur.
Organizational Crisis
Similar to the outcome of an unmanaged crisis, true organizational crises have the ability to destroy the entire organization. (2002) noted that organizations all over the world encounter crises of different forms. Security leaks, product tampering, workplace violence, unethical work behaviors, abduction of company executives and employee fraud are some of the common sources of organizational crisis. All these examples have the capability to bring an organization to its downfall and separate daily work decisions and challenges from the concept of organizational crisis.
Although day-to-day difficulties at work at not considered as a crisis, the ability of the managers and employees to overcome this daily troubles is said to help prepare them in managing real crisis situations. Analyzing the given sources of organizational crisis, it becomes apparent that current work trends influences the type of crisis that occur in the organizational setting. Computer and technology utilization in the work sector for instance, led to the rise of several crisis related to faulty systems, innovation or programs.
Crisis Management
While business organizations go through a number of crises, there are available ways on how to address them. Similar to disasters where relevant organizations and agencies provide relief goods, medical aid or livelihood assistance to the victims, organizations also employ a strategy commonly referred to as crisis management. The goal of this approach is to develop timely and appropriate decisions in times of extraordinary situations. The combined certainty and timeliness aspects in the decisions developed during crisis management then help in achieving the approach’s ultimate objective, which is the achievement of organizational balance (, 2002).
and (1998) noted that crisis management is a systematic or organized approach involving the entire organization and enables it to counter crisis events. Organizations employ crisis management techniques by developing formal communication systems or troubleshooting means to eradicate technological failures (, 2001). Crisis management may also be applied through the development of pre-established guidelines or activities that would also allow organizations to respond effectively and safely to crisis events. These activities may involve disaster recovery procedures, emergency response, communication and business continuity or risk management.
Aside from allowing the development of useful decisions to address organizational crisis, crisis management is also beneficial as it prepares the organization in advance before the problematic incident actually happens. Preparing ahead of time before crisis strikes help in maintaining calmness as well as clear mindedness among the managers and employees. In turn, the organization is able to solve the incident effectively as well as learn from it (, 2002). Crisis management does not only help organizations become better decision-makers during a crisis; this also increases the flexibility of the organizational members ( & , 2004). This is an important development as it makes the managers and employees more dependable despite changing work environments.
The usefulness of employing crisis management has been stressed over the years. This is perhaps attributable to the fact that organizations nowadays encounter more crises that before. Various authors have related this turnout to the rise of more sophisticated organizational products and services as well as increased dependence on technology ( & , 1999; ., 1998). Comparing it during its introduction in the latter part of 1970s, crisis management has indeed evolved and increased in popularity due to these organizational developments (, 1995). Along with its development and increasing popularity, various means on how crisis management can be applied in the organization have also been introduced.
Means of Crisis Management
It has been said that in times of disaster, chances of survival increases when more and more people help each other. In particular, disaster management is carried out effectively as emergency agencies, business sectors, local and national governments work together. Survival plans are developed ahead in order to address disastrous events. Through this, more lives can be saved and restoration would be immediate. In the same way, crisis management involves advance planning as well as the participation of the organizational members. Moreover, planning ahead so as to overcome incoming crises can also result to a number of advantages for the organizations. Specifically, advance plans for organizational crisis help in saving the company’s image as well as its valuable resources (e.g. employees, money). Readying means to counter organizational crisis also helps organizations in establishing rehearsed actions, which contributes to damage control. Enforcing strategies that would address crises within the company is also useful in protecting the future of the organization. Failing to apply these means of crisis management on the other hand, can lead to loss of both financial and public confidence. In worst cases, this can even lead to irreversible damages.
Establish a crisis management team
When crisis strikes, it is human nature that managers and employees alike to be in a state of disarray or shock; with the presence of such strong and unpleasant emotions, acting to counter the impact of the crisis become even more difficult, if not impossible. This then stresses the importance of having a crisis management team, which would basically be comprised of people capable of giving out appropriate directions and counseling should a crisis occurs. Appointing the leader who would manage the said team is also essential. While the selected leader may not have enough skills to handle the crisis itself, it is essential that a crisis management team leader is capable of commanding and galvanizing people to move or act despite stressful situations.
The leader and the members of the crisis management team will also be the one in charge of identifying the likely sources of organizational crises and developing appropriate procedures should they occur. Aside from increasing organizational preparedness, this particular means of crisis management also aims to identify the similarities of the identified origins or organizational crises. Through this, the team could assign the same crisis management measures to crisis situation that share some form of similarities or connection. This then increases the number of crises covered by the team as well as helps in saving valuable time in planning.
One good example that explains this procedure better is the 9/11 crisis. At that time, affected organizations were not prepared for attacks of terrorism; however, they are aware on how people within a building on fire can be evacuated safely. During the rise of Y2K threats, organizations were actively developing and implementing technological strategies to protect their databases and systems. While this crisis never occurred, organizations found their supposedly Y2K-protection strategies effective on data recovery, hot sites activation and other important activities. With these, organizations did not only save their valuable resource but also reduce the tension among their workforce. In general, team members and leaders are assigned in managing crisis management efforts in order to enable the organization to return to productivity. It is also the objective of the team to protect and maintain the reputation, value and brand of the organization despite the crisis (, 2005).
Developing a Crisis Management Plan (CMP)
One of the essential procedures in applying crisis management is the development of a crisis management plan (CMP). and (1993) stated that a CMP is comprised of the processes and steps suitable for addressing both real and perceived organizational crises. Similar to the concept of crisis management, the CMP is created in advance so as to achieve more efficient and speedier responses to crises. (1999) noted that several organizations have their own CMPs and the number of users of this strategy continues to increase.
The components of the plan are purely dependent on the needs and priorities of the organization; developing the CMP and its components is also based on the types of crises that are likely or frequently affects the organization. For instance, the CMP can include the steps citing what the organization would do or say to relevant parties in the wake of a crisis. This component is typically referred to as crisis-response strategies; these are actually message repertoires that aim to repair or protect the company image by means of convincing the stakeholders or influencing their perceptions. In integrating this procedure in the CMP, consistency is very crucial.
In particular, crisis response must be relayed to stakeholder in a consistent manner. (1999) stated that in order for organizations to deliver consistent replies to the stakeholders, a unified response must be developed. This was supported by (2001) and referred to this strategy as the audience-centric approach, which basically stresses the need for organizations to relay information with similar feel and content to relevant parties, particularly in times of crisis. Applying this principle in CMP development is significant as it prevents the delivery of mixed signals or incomplete information to affected organizational members; this then can help prevent further confusion and tension within the organization. In addition, this principle clearly emphasizes that in order to effectively manage an organizational crisis, affected audiences must be given due priority.
Theoretical Relation
The systems theory is one the relevant theories that stresses the presence of organizational crises and the need to manage them. The theory states that organizations at present operate in modernized environments with high-end facilities and technologies. While these systems are useful in improving organization processes and outcomes, this also increases the likelihood of crisis from happening in the organizational setting. Although most machines and tools are already capable of fixing internal problems, no calculations or simulations can neither prevent nor predict unexpected breakdowns. A good example of this concept is the crisis in Chernobyl, where modern technology was unable to protect the plants’ employees and surrounding community as well as predict such a fatal crisis.
This theory explains that with the presence of technology, the occurrence of organizational crises becomes more likely. Moreover, the use of technology alone is not sufficient enough to protect an organization from crisis situations. This theory then stresses the necessity of being more prepared for unexpected organizational events, considering that the availability of technology increases their possibility. In addition, managing crisis should take on a holistic approach where both strategic planning and capable organizational members should be combined.
Conclusion
Disaster is defined as the disruptive event that can affect several people and require external assistance; crisis on the other hand, is the term pertaining to the outcome of multiple unmanaged disasters. In this paper, it has been made clear that while disaster and crisis are two different terms, both shares the same need for effective management. In the organizational setting, crisis or the occurrence of multiple uncontrolled disasters also does occur. Should the crisis remain uncontrolled and unresolved, irreversible damages as well as major company losses will result. Thus, it is essential that organizational members are prepared enough to overcome these untoward events. Similar to the management of a disaster, crisis management helps in saving the company from major losses. Developing a crisis management team, appointing team leaders and developing CMPs in advance are some of the means organizations can apply to prepare them against crisis incidents. In conclusion, by means of combining human capability and advance planning, risks and damages brought about by organizational crisis will be experienced within manageable levels.
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