Develops an Early Warning Mechanism:
The survivors of a crisis are in search of ways to avoid any such happening in the future. In order to influence events in one’s favor, one must know what is about to come up. Hence, one must develop and establish early warning mechanisms that will sense non-performance and signal trouble long before a crisis starts.
Appearance of New Competitive Edges:
A company is usually smarter and more experienced after it has encountered a crisis. The company might have been temporarily weakened by the experience, or it might have been reduced in size. But, on the whole the crisis tends to incorporate a team spirit among the people of the organization. It is because they have faced a common enemy and have learned to fight side by side. They have learned to handle adversity and stage a come back. There is no more important formula for succeeding in business than a strong leader backed by a loyal, inspired team.
Effects of Crisis:
We have seen the benefits which a crisis can bring about. Now we focus our attention on he effects a crisis can have on the organization, as well as on the parties related to it.
All the people involved with the company are affected, more or less. Customers are shocked, sales are affected if the product itself is under attack.
Employees are the worst affected, because they are the people directly concerned with any crisis. Top, executives feel the pressure in social situations. Media can play havoc in covering the whole event.
The creditors and the lending institutions react bitterly to a situation of crisis. They want to know why they were not informed about the problem earlier. Further they demand the details of the steps being taken to overcome the problem.
Suppliers are affected too, as any downward trend in the company’s production and sales would mean a decreased demand for the supplies.
The failure to manage a crisis also affects the public which in turn brings about increased scrutiny by the government and an added burden of regulations.
In short, crisis management consists in handling crisis situations and finding effective solutions to such situation.
Now let us examine the methodology for handling such crisis situations. In the event of crisis, the procedure given below may be followed:
1) All the facts about situation should be gathered. The data may be collected directly by contacting the affected parties, say the workers or the customer, or it can be collected from the available records. This exercise will bring forth the unseen part of the problem. The hidden information will help the management find a solution to the problem.
2) The Management should try to gather the facts from various parties who may throw light on the matter. It can also call an emergency meeting of the various parties involved. For example, for a serious marketing problem, a meeting of the marketing managers (Advertising, marketing Research, sales etc) and sales representatives would be a positive step towards solving the problem.
3) The decision taken by the management at this time should be clear and distinct. The decisions have to be convincing if they are to be clear. By understanding the background of the problem, the management should identify the real problem and the peripheral problems. The decision should be aimed at the main problem and not the peripheral problems.
4) The most important aspect of the crisis management is to communicate the decision properly. This should be done immediately in order to prevent the rumors having their toll. Public address systems and notice boards can prove to be good media for communicating.
5) The management should act immediately. Any action thought of should be acted upon without wasting time. Forming of action groups or redressal committees would further worsen the situation. The management should act immediately and come to a decision.
To sum up, the management has to be alert, cool and calm in accepting the situation, gather all relevant facts about the crisis, take clear and distinct decisions, and communicate the decision properly. In other words, the management should be able to understand the situation quickly and take immediate actions.