Crisis management in companies its types and 14 steps to deal

Understanding the concept of crisis management

In this article we will provide you the knowledge about Crisis management in companies its types and 14 steps to deal the crisis.

Crisis management is a set of measures that aim to minimize the damage in the occurrence of conflicts that can be internal or external, as well as causing the least impact to those involved.

Crisis management is an action plan made to face a moment of crisis, whose objective is to minimize or eliminate the impacts that may be caused to the company, employees, society and all those involved in the conflict.

Remember that managing is, among other actions, planning and managing so that the activity goes as expected.

As with other types of management — financial, commercial, people and others — crisis management is an extremely relevant process for organizations.

However, it goes far beyond organizing, managing and controlling. In crisis management, it is also necessary to circumvent situations and be very careful to act in the face of the challenge and, especially, in front of people.

The word “crisis” is self-explanatory, but know that in its new Handbook on Crisis Management , the ISO classifies the term as:

“An inherently abnormal, unstable and complex situation that poses a threat to the strategic objectives, reputation or existence of an organization”.

In the organizational context, managing a crisis means making delicate decisions with the utmost care so that the situation does not result in even more serious conflicts or irreparable consequences.

To manage a crisis is to identify and develop concrete and effective measures for the company to continue operating. For this to be done, it is necessary to draw up a crisis management plan.

This plan consists of documenting practices that establish the best ways to make a decision to face adversity.

It should also contain all the organization’s operating rules during the critical moment, what are the attributions and responsibilities, who will assume them and when will assume them.

In addition, the crisis management plan defines which tactical actions — previously prepared — will be adopted, which training courses should be put into practice, among other guidelines that will vary according to the activities of each business.

Planning of this type is also essential so that the organization can reduce the response time for society, as well as reduce the costs that may exist at the moment.

However, to understand even better what crisis management is, it is necessary to keep in mind that it begins in the pre-crisis, that is, before the conflict actually happens .

Anticipating and planning for possible scenarios is the first part of planning , which will be used when adversities arise.

Therefore, a corporate crisis management done correctly requires a long-term vision and understanding of the operating market.

The importance of good crisis management

Having a crisis management plan means preventing the mishaps that may occur in the future in the organization or in the market in general.

It is important to think of all possible scenarios, and strategic planning will serve as a foundation so that it is not necessary to close the company.

In addition, crisis management helps to:

  • have a long-range view of the business;
  • have better analytical capacity to think of solutions in the midst of conflict;
  • make decisions in the safest way that causes the least possible impact;
  • identify opportunities and threats ;
  • reduce the negative impacts of the crisis in the post-crisis period;
  • elaborate tactical and punctual actions for the company to continue operating.

The main types of crisis

A crisis can be internal, external or provoked by external factors and unrelated to the company’s activities.

So, know that there are several ways an organization can be impacted by conflicts and here we will address the most common causes. follow up.

1-Financial crisis

This is a type of crisis that is often seen in the market. It happens mainly when the organization does not take seriously the importance of good financial and budget planning and especially that it is thought of in the long term.

However, it can also happen when the company is impacted by external factors such as crises in other countries, problems with exports, epidemics and pandemics, devaluation of the currency used for its transactions, loss of capital, resources and international investors, among other reasons.

2-Crisis in the company’s reputation

It can be caused by rumors’, sabotage, accusations, revenge from consumers, partners or employees, bad positioning of a member, among other serious motivators that affect the company’s image.

It can also happen when there is a leak of sensitive business data and confidential information of the organization and its employees.

In companies that are dishonest, for example, it is common to see scandals of this type involving corruption and money laundering. Need a better element to take down an image?

Understanding the importance of corporate crisis management also boils down to understanding that in a time of high volume of information consumed by the internet, especially by social networks, maintaining a good reputation is a valuable asset for any organization.

3-Crisis caused by structural failures

This can be considered the type of crisis that causes the most serious impacts, as it often results in loss of life.

It happens most often in companies where employees perform risky activities such as construction, mining, or dealing with tasks that threaten their safety at work .

In addition to lives, this type of crisis can cause other irreparable losses, such as leaving sequels on those involved, facing lawsuits, labor, fines and million-dollar indemnities to recover part of the damage caused.

In addition to all these inconveniences, the organization still has its image shaken in the eyes of society, and rebuilding the reputation of an already established brand is not an easy process.

How to manage crisis in 14 steps

If your company fulfilled its role, set up a strategic plan — we’ll show you how to create one later, don’t worry — and it still wasn’t possible to dodge the crisis, you need to check out the following tips to try to circumvent the current situation .

1. Assemble a crisis committee

As important as having IT, marketing and financial areas is having a crisis management committee. Among the strategic actions of the committee are:

  1. the correct definition of the problem;
  2. gathering the necessary information;
  3. the centralization of communication and the definition of strategies;
  4. have frequent communication with the media.

Given this, choose people who are key parts of the business, such as the C-Level , and thus assemble a team focused on crisis management.

Likewise, it is essential to choose a spokesperson for the company and educate others about who can speak for the company exclusively.

2. Participate in the moment and be present

It is not enough for a president, director or business owner to be concerned about the problem, he must show the team that he is really concerned and involved, in addition to demonstrating that he is present, needs support, but can also offer help.

Otherwise, employees and other managers may have the feeling of negligence on the part of top management. This further damages the situation and the search for alternatives to face it.

3. Share what happened with your team

Managing a crisis is working together. Don’t think that by showing reality to employees you will be showing weakness, because that’s not quite the case.

At this point, everyone should be aware of what is happening in the organization, as this will help to think of solutions, as insights will emerge faster.

Also, by realizing that the company is being transparent with them, employees will feel that they are part of the business and that they truly belong in the company. Thus, they will feel more motivated to think of ways to get through the phase.

A good way to do this, depending on the type of crisis the organization is facing, is to ask for feedback on the good and not so good things the company has been doing and how the processes are being executed.

Thus, you will hear what each one has to say and, at the same time, the solutions they propose for the company.

You will be surprised by the possibilities and the amount of ideas that can come from several heads thinking together.

4. Create an action plan

From the ideas that will emerge from the brainstorm made with the team, it is possible to think of strategies to overcome the crisis in a less impactful way for the business and for the employees.

We are not referring to the contingency plan — because, as the name says, this is a prior plan, thinking about the possibilities that can happen in the business — but, rather, a tactical plan that can be put into practice at the moment , in the midst of the crisis.

5. Do not speak until you have all the correct information

Conflict situations are marked by thoughtless attitudes, irritability, worry, despair, fear and other feelings.

At this time, it is essential not to speak in the heat of the moment, much less without analyzing the facts as they really happened.

It takes emotional intelligence . Before communicating, including with the internal team, have all the reports, data and information necessary to make decisions, even if it is just to inform the actions that will be taken from then on.

6. Speak directly to victims and those involved

Crises of all kinds happen daily in the market, however, the most delicate ones are the ones that result in victims.

At this point, it is very important that the organization takes care of these victims and their families and speaks directly to them.

Otherwise, the company may convey the image of neglect, negligence, omission and indifference towards these people.

Certainly, this is a situation that will not help to face the crisis and will bring even more damage.

7. Recognize the importance of HR and the Communication and Marketing sector

All departments are important to a company, and the imbalance between them impacts the organization’s success.

But, in times of crisis, two sectors become even more relevant to help overcome the problem: Human Resources and Communication and Marketing.

In fact, the biggest challenge for these areas is the company’s crisis management, as communication is a key part of managing these challenges . Therefore, it must be clear, convenient, performed at the right time and in the right way.

It is essential that communication in crisis management is done with transparency and agility at this time, so Communication and Marketing activities will be fundamental to assist in relations with all the company’s external issues.

Human Resources will work with another party involved in the crisis: employees.

The sector will be responsible for ensuring the transparency of internal communication , the well-being of workers, the maintenance of a good organizational climate, as well as helping to develop strategies always thinking about this main asset, which is the worker.

8. Cut costs and trim expenses

Companies facing financial conflicts need to devise strategies to contain expenses and cut costs.

An example is, if possible, to reduce telephone and internet plans or establish momentary rules for use.

The most important thing is to review which services are expendable in this new scenario. Another way to reduce costs is to give up what does not offer a good margin for the company , such as certain products sold, but which are not profitable to maintain them.

9. Evaluate the possibility of selling any of the company’s assets

This tip goes for organizations that are facing financial difficulties. If there are assets that are not being used or are no longer relevant to the business, you need to consider getting rid of them and saving your cash.

10. Make partnerships

In times of instability, such as financial ones, it is difficult to survive alone, and you may find yourself needing to seek support from partners. Know that they can help save your business!

Who was your competitor before, in the midst of a crisis like the one the market has been facing, can now be your partner. Have you ever stopped to think about it? Even because two or more companies that are in need of help are stronger than one swimming against the current.

11. Interrupt business expansion and investment processes

Regardless of the cause of the crisis, it is important to stop activities linked to the organization’s expansion process.

Especially if it is motivated by financial issues, now the period will be one of cost containment.

Otherwise, customers, partners, suppliers and society in general may question whether the company is really going through conflicts due to the continuity of activities that represent a good phase, such as growth projects.

12. Maintain the work routine during the crisis

If possible, do not interrupt the company’s activities during a crisis.

Operating normally gives people more stability and a feeling of security and that should be one of the goals at this point.

13. Renegotiate with suppliers

If the problem is money, it’s time to look for suppliers, explain the situation and renegotiate the company’s debts.

At this point, consider the possibility of offering barters or other non-monetary considerations that are interesting for both parties.

14. Reflect on the opportunities that arise in the midst of the crisis

It seems cliché to say that “where there is a crisis, there are opportunities” and it may be that you can no longer bear to hear that phrase.

It turns out that, in most cases, it makes sense, as challenges almost always offer enriching lessons.

Thus, evaluate the possible solutions to solve the crisis, including using resources that were not included in the contingency plan.

Often, looking from a new point of view can represent the solution and the possibility of acting in new post-crisis niches.

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