crisis management

1. 1
Issues Management
and Crisis Management
Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz
Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
Prepared by Deborah Baker
Texas Christian University
Chapter 6

2. 2
1. Distinguish between the conventional and strategic
approaches to issues management.
2. Identify and briefly explain the stages in the issues
management process.
3. Describe the major components in the issues
development process and factors in actual practice.
4. Define a crisis and identify the four crisis stages.
5. List and discuss the major stages or steps involved in
managing business crises.
Chapter 6 Learning Outcomes

3. 3
Chapter 6 Outline
 Issues Management
 Crisis Management
 Summary
 Key Terms
 Discussion Questions

4. 4
Introduction to Chapter 6
This chapter focuses on issue and crisis
management, and the planning processes
required to improve stakeholder management
and to respond to stakeholder expectations.

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Issues Management
Conventional Approach
Strategic Management
Approach
Narrow Focus
Broad Focus

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Issues Management
Conventional Approach
 Issues fall within the domain of public policy or public
affairs management.
 Issues typically have a public policy / public affairs
orientation or flavor.
 An issue is any trend, event, controversy, or public
development that might affect the corporation.
 Issues originate in social / political / regulatory /
judicial environments.

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Issues Management
Strategic Management Approach
 Issues management is typically the responsibility of
senior line management or strategic management
staff.
 Issues identification is more important than it is in the
conventional approach.
 Issues management is seen as an approach to the
anticipation and management of external / internal
challenges to the company strategies, plans, and
assumptions.

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Strategic Issue Management
8
Figure 6-2

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Issues Definition
Issue
A matter that is in dispute between
parties. The dispute evokes debate,
controversy, or differences of opinion.

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Issues Definition
Characteristics of an Emerging Issue
 Terms of the debate are not clearly defined
 Issue deals with matters of conflicting values
and interest
 Automatic resolution is not available
 Issue is often stated in value-laden terms
 Trade-offs are inherent

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Basic Assumptions
Issues Management Process
 Issues can be identified earlier, more completely, and
more reliably
 Early anticipation widens the range of options
 Early anticipation permits study and understanding of the
full range of issues
 Early anticipation permits organization to develop a
positive orientation towards the issues
 Organization will have earlier identification of the
stakeholders
 Organization will be able to supply information to
influential publics earlier and more positively, creating
better understanding

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Model of Issues Management Process
Identification of IssuesIdentification of Issues
Analysis of IssuesAnalysis of Issues
Prioritization of IssuesPrioritization of Issues
Formulation of Issue ResponsesFormulation of Issue Responses
Implementation of Issue ResponsesImplementation of Issue Responses
Evaluation, Monitoring, and Control of ResultsEvaluation, Monitoring, and Control of Results
Figure 6-3

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Identification of Issues
Scan the environmentScan the environment
Identify emerging issues and trendsIdentify emerging issues and trends

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Identification of Issues
Leading Forces as Predictors of Social Change
 Leading events
 Leading authorities / advocates
 Leading literature
 Leading organizations
 Leading political jurisdictions

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Identification of Issues
Figure 6-4

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Issues Selling and Buying
Issues
Selling
Relates to middle managers exerting
upward influence in organizations as
they try to attract the attention of top
managers.
Issues
Buying
Top managers adopt a more open
mind-set for the issues that matter to
their subordinates.

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• WhoWho (which stakeholders) is affected by the issue?
• WhoWho has an interest in the issue?
• WhoWho is in a position to exert influence?
• WhoWho has expressed opinions on the issue?
• WhoWho ought to care about the issue?
• WhoWho started the ball rolling? (Historical view)
• WhoWho is now involved? (Contemporary view)
• WhoWho will get involved? (Future view)
Analysis of Issues

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Ranking of Issues
Xerox Approach
 High priority
 Nice to know
 Questionable
PPG Approach
 Priority A
 Priority B
 Priority C
Probability-Impact Matrix
HighMediumLow
HighMediumLow
Probability of Occurrence
ImpactonCompany

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Filtering and Ranking of Issues
Figure 6-5

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Five Filter Criteria
1. Strategy
2. Relevance
3. Actionability
4. Criticality
5. Urgency
Ranking of Issues

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Other Issues-Ranking Techniques
Polls / SurveysPolls / Surveys
Expert panelsExpert panels
Content analysisContent analysis
Delphi TechniqueDelphi Technique
Trend extrapolationTrend extrapolation
Scenario buildingScenario building
Use of precursor events or bellwethersUse of precursor events or bellwethers

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Formulation and Implementation
of Responses
Formulation The response design process
Implementation The action design process
 Plan clarity
 Resources needed
 Top management support
 Organizational structure
 Technical competence
 Timing

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Issues Development Process
Issues
Development
Process
The growth process or life cycle
of an issue

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Issue Development Life Cycle Process
Figure 6-6

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Issues Management in Practice
 Companies that adopt issues management processes …
 develop better overall reputations
 develop better issue-specific reputations
 perform better financially
 Provides a bridge to crisis management

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Crisis Management
To manage a crisis one first must understand that crises:
Occur abruptly
Cannot always be anticipated or forecast
May not occur within an issue category
http://www.crisisexperts.com
@

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Crisis Management
Basic Causes of a Business Crisis
1. Acts of God
2. Mechanical problems
3. Human errors
4. Management decisions / indecisions

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The Nature of Crises
Crisis Definitions
 A major, unpredictable event that has potentially negative
results and its aftermath may significantly damage an
organization and its employees, products, services,
financial condition, and reputation.
 A low-probability, high-impact event that threatens the
viability of the organization and is characterized by
ambiguity of cause, effect, and means of resolution, as
well as by a belief that decisions must be made swiftly.

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Crisis Management
How a Crisis Should NOT be Handled
 Minimizing the issue
 Stonewalling
 Too little, too late
From Figure 6-7

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Types of Crises
EconomicEconomic
PersonnelPersonnel
PhysicalPhysical
CriminalCriminal
InformationInformation
ReputationalReputational
Natural disastersNatural disasters

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Types of Crises
Outcomes of Major Crises
 Escalated in intensity
 Subjected to media and government scrutiny
 Interfered with normal business operations
 Damaged the companies bottom line
 Resulted in major power shifts

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Crisis Management: Four Stages
Prodromal Crisis Stage
Warning—precursor
Symptom —precrisis
Prodromal Crisis Stage
Warning—precursor
Symptom —precrisis
Acute Crisis Stage
Point of no return
Crisis has occurred
Acute Crisis Stage
Point of no return
Crisis has occurred
Crisis Resolution Stage
Patient is well/
whole again
Crisis Resolution Stage
Patient is well/
whole again
Chronic Crisis Stage
Lingering on—perhaps
indefinitely; period of self-
doubt; self-analysis
Chronic Crisis Stage
Lingering on—perhaps
indefinitely; period of self-
doubt; self-analysis
Learning
Figure 6-8

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Pattern of a Poorly-Managed Crisis
 Early indications that trouble is brewing occur.
 Warnings are ignored / played down.
 Warnings build to a climax.
 Pressure mounts.
 Executives are often overwhelmed or can’t cope.
 Quick-fix alternatives look appealing. Hasty moves create
trouble.
 Clamming-up versus opening-up options present themselves.
 Most firms choose the former.
 A siege mentality prevails.

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Managing Business Crises
Fink’s Three-Stage Model
1. Identifying the crisis
2. Isolating the crisis
3. Managing the crisis

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BusinessWeek’s Five Steps in Managing Crises
1. Identify areas of vulnerability
2. Develop a plan for dealing with threats
3. Form crisis teams
4. Simulate crisis drills
5. Learn from experience
Managing Business Crises

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Monsanto’s 10R’s for Handling Public Policy Crises
 Respond early
 Recruit a credible spokesperson
 Reply truthfully
 Respect the opposition’s concerns
 Revisit the issue with follow-up
 Retreat early if it’s a loser
 Redouble efforts early if it’s a critical company issue
 Reply with visible top management
 Refuse to press for what is not good public policy
 Repeat the prior statement regularly
Managing Business Crises

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Managing Business Crises
Augustine’s Six Stages of Crisis Management
1. Avoiding the crisis
2. Preparing to manage the crisis
3. Recognizing the crisis
4. Containing the crisis
5. Resolving the crisis
6. Profiting from the crisis

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1. Identify crisis communication team
2. Identify key spokespersons
3. Train your spokespersons
4. Establish communications protocols
5. Identify and know the audience
6. Anticipate crises
7. Assess the crisis situation
8. Identify key messages to communicate
9. Decide on communication methods
10. Be prepared to ride out the storm
Crisis Communications

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Components of Crisis Plans
 Media communications 99%
 Employee communications 98%
 Crisis management team 94%
 Communications with elected officials 86%
 CEO / senior executive involvement 82%
 Documentation / written policy / handbook 81%
 Website communications 77%

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Be First, Be Right, Be Credible
Be FirstBe First
Be CredibleBe Credible
Be RightBe Right
Get message out first to control
content and accuracy
Get message out first to control
content and accuracy
Be open, honest, and speak with
one consistent voice
Be open, honest, and speak with
one consistent voice
Say and do the right thingSay and do the right thing

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Benefits of Crisis Management
 Fewer disruptions to every life for consumers,
employees, and citizens
 Preparing for one type of crisis may be beneficial
when other types of crises strike

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 Issues management
 Crisis management
 Portfolio approach
 Issue
 Emerging issue
 Issues selling
 Issues buying
 Probability-impact matrix
 Issues development
process
 Crisis
 Prodromal crisis stage
 Acute crisis stage
 Chronic crisis stage
 Crisis resolution stage
 Crisis teams
 Crisis communications
 Ten steps of crisis
communication
 Being first
 Being right
 Being credible
Key Terms