Organizations in the Face of Crisis

Managing the Brand and Stakeholders

Dennis W. Tafoya

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137313973
• Topic: Business
• Subtopic: Marketing
• Index: Business

Organizations in the Face of Crisis offers a new approach to the treatment of threats to an organization, the brand, and the stakeholders. Case studies and diagnostic tools are used to demonstrate the effects of a crisis and to provide insight and strategies on managing the crisis at hand as well as the long-term effects.

P A R T 1

THE ORGANIZATION, THE BRAND, AND THE ORGANIZATION’S STAKEHOLDERS

PROMOTING DEVELOPMENT, MAINTAINING ORGANIZATIONAL AND BRAND well-being, and nurturing the relationship stakeholders have with the organization are fundamental management responsibilities.

C H A P T E R 1

INTRODUCTION

HARDLY A DAY PASSES WITHOUT SOME EXAMPLE OF AN ORGANIZATION’S brand in crisis. Politicians and their campaign organizations are classic examples but so are the organizations whose products contaminate the environment or threaten the public’s health and well-being. Anything that compromises or challenges an organization’s capacity to perform is a potential crisis for the organization and its brand. If a religious organization does not meet the needs of its followers, they leave. If a cult doesn’t meet the needs of its members, they seek their goal fulfilment elsewhere. If a manufacturing center cannot produce goods that meet customer standards, the customer will reject it. If a storm damages a retailer’s store so it cannot open for business, the customer will shop elsewhere. If a politician violates public trust, an election campaign may end. Failure to recognize, to oversimplify, or to treat a potentially crisis-causing event can lead to trauma and subsequent disaster for the organization.

No organization is exempt from the possibility of experiencing a crisis and the resulting traumatic effects. Customers, regulators, managers, and staff as well as other organizations or members of communities not associated with the organization in crisis are potential candidates for trauma. The expression of trauma is not limited to evident loss, pain, and suffering. Trauma can trigger the emergence of uncertainty about what to expect, what is correct, what is right or wrong, or sometimes simply what to do with a crisis and its effects. Since an organization’s brand is one of its most distinctive features, threats to the brand are viewed as a crisis and the need to respond given top priority.

This book fills a gap in contemporary approaches to the management of an organization facing a crisis. In the book, the role of events and their simultaneous effects on an organization, its brand, and stakeholders are examined in terms of three phenomena. One of these is familiar: it’s the network that defines the relationship between an organization and its stakeholders. A crisis stresses an organization’s resources and staff and, importantly, virtually any stakeholder included in the universe defining an organization. However, an organization’s network isn’t only defined by those in a positive relationship with the organization. Friends or foes, customers and competitors, and regulators and agitators also define a stakeholder network. Too narrow view of the make-up of an organization’s stakeholder network, for example, by only concentrating on those with an interest in the organization, for good or ill, is a potential risk. Discussions in the book illustrate why and how an effective crisis management plan can deal with all stakeholders, regardless of their vested interest.

The other two phenomena are unique to the book and new to the study of crisis management. The first, labelled as a “stakeholder swarm,” captures the emergence and behavior of stakeholders once an organization slips into a crisis. Stakeholder swarms are comprised of the organizations, groups, and individuals that surface as the crisis unfolds. These swarms define the organization’s “crisis stakeholder network” and can include those one might expect to emerge like lawyers, regulators, healthcare professionals or, members of the news media to those social bloggers, protesters, thrill-seekers, and gossipmongers who feed on the emerging brand crisis. Both the expected and the “trauma seekers” are part of the collateral damage an organization must manage when the public nature of its brand is in crisis. Their actions and behavior can stress every facet of an organization, from people, processes, goods and services, even the organization’s culture.

The second new phenomenon examined in the book is “brand trauma.” Brand trauma reflects the multidimensional features, products, outcomes, and impacts the organization, its brand, and stakeholders can experience when an organization is under attack or stressed by a crisis. Trauma, a by-product of any crisis, is triggered by a stakeholder response to conditions that put them or their needs at risk. Typical crisis management efforts often limit their treatment of trauma to a few groups, typically those considered the injured parties. Brand trauma, in contrast, reflects the damage, exposure or, risk to the very features that define the organization’s credibility, quality, trustworthiness or general inherent value. Truly, brand trauma can shake the organization to its core leaving its long-term health, well-being and sometimes even its future exposed, vulnerable or, simply in question. Brand trauma receives particular treatment in the book so that those charged with preparing a suitable crisis management plan avoid the inevitable rush to just “get beyond the crisis” and instead seek to develop strategies that produce a more effective crisis management plan.

There is no simple recipe or formula to follow when building a plan to address problems and challenges as dynamic and robust as those associated with a crisis. The approach offered here helps the reader first understand the difference between the event(s) or causes leading up to the crisis and then what is necessary to include in a crisis management plan. This is a vitally important point: those expected to manage the crisis must understand the boundaries that define their role and responsibilities from those charged with managing the event or factors causing the crisis.

Next emphasis shifts to the production of a crisis management plan that will guide those responsible in this effort. This treatment illustrates strategies one might use when designing a plan to meet the evident needs associated with a crisis while also producing a plan with sufficient flexibility so that any discovered or newly emerging challenges can be incorporated in the crisis management effort. Producing an effective crisis management plan requires pragmatic competencies to anticipate what is needed and might happen on the short term within the context of a vision for the future. New Jersey’s governor Christie’s crisis management approach to the devastation following hurricane Sandy is a textbook model for the plan presented in the book. Even a brief review of his performance illustrates how an effective crisis manager can use even the smallest act to impact immediate needs vis’ a` vis’ one’s vision of what the future will require.

To set the stage for the development of a crisis management plan, the book is divided into three parts. Part 1 presents a model and framework for building crisis management strategies for immediate action. The model’s details are presented in chapter 2 and are anchored to the one element stakeholders in and outside the organization identify with, invest in, and sometimes even embrace, the organization’s brand. The prudent will use the model as a template, a guide, and a reference.

Chapters 3 and 4 explore factors that contribute to the emergence of a crisis. The role of the stakeholder is central to both chapters. Chapter 3’s focus might be called “the challenge of stakeholder management.” The chapter may serve as wake-up call for some and as a reminder to others that when a crisis breaks many if not most members of the newly formed crisis management network will act on their own behalf, sometimes with little regard for what those in the crisis-bound organization want or need. Indeed, stakeholders linked to the events causing the crisis and may become part of the crisis management challenge facing the organization.

Chapter 4 explores the role of the stakeholders in terms of the organization’s stakeholder network. Broadly speaking, an organization’s stakeholder is anyone who has a relationship with the organization. It’s a broad definition reflecting those stakeholders with a casual, passing relationship with the organization or its products and services as well as those with sophisticated and complex relationships who would do “anything” for the brand, even die for it as military or religious zealots have been known to do.

The stakeholder network is an amalgam of different stakeholders, each having a relationship with an organization yet each also pursuing a personal vision and mission—even if that vision and mission is in conflict with the organization’s. This is an important discussion, for it illustrates that not all stakeholders like or even care about the organization and its mission. In fact, some may be part of the stakeholder network only because they want to see the organization punished, defeated, and sometimes even destroyed. Regardless of their sentiments, their behavior or potential must be considered when developing the crisis management plan.

Material presented in chapter 4 serves as a useful transition to part 2 where we examine the relationship between strategy and an emerging crisis. This discussion begins in chapter 5 with a straightforward examination of the nature and types of events that can lead to a crisis. Usually the “extreme event” is the focus of material aimed at helping those expected to manage a crisis: the tornado that rips through a community, the fire, or the terrorist attack. Extreme events are noteworthy but routine events are the source of conflict in most organizations. Think about it. Poor customer service, bullying, sexual harassment, and theft often surface around an organization’s routine events such as servicing a customer, questioning a witness, counseling a member of the parish, or balancing the cash receipts at the end of the shift. In fact, more than 80 percent of an organization’s activities are devoted to routine events so the law of averages would suggest that these events, however small, are a primary source for a potential crisis in need of management.

A “crisis event” doesn’t have to be large to be meaningful or significant. Poor customer service, a defective product, or a small accident (a “fender bender”) may be relatively insignificant and happen only once but the ramifications can impact the lives of those involved who may lose their job or find themselves in a civil suit because of resulting personal injury or perceived carelessness. After all, the 1982 Tylenol tampering incident occurred in only one region of Chicago and yet Johnson & Johnson took no chances and pulled more than 30 million bottles of the product off the market nationwide. Twenty years have passed since that incident and yet everyone reading this is exposed to some type of tamper-proof packaging first introduced by Johnson & Johnson in response to that crisis (Giges, 1982).

Chapter 6 presents a new concept in the field of crisis management: the stakeholder swarm. Core stakeholders often present enough of a challenge for an organization’s leadership during a crisis but the emergence of a stakeholder swarm can challenge every facet of the organization and its operations. Swarms always form around a crisis and it’s their management that makes the difference between successful crisis management or increased risk and trauma.

Factors that contribute to trauma and particularly brand trauma are presented in chapter 7. For example, the introduction of the concept of brand trauma illustrates both how a brand can be effected by a crisis and, importantly, how significant the scope and scale of a crisis may be for the organization and its stakeholders. The fact that trauma is a very personal experience means its effects can and usually do last beyond the event or immediate crisis. Just think about what comes to your mind when you read 9/11, BP or Katrina.

Part 3 extends the book’s focus to include the implementation and management of a crisis management strategy. Indeed, material presented in chapter 8 and 9 might be described as outlines that aim at (1) keeping the organization going, (2) managing the crisis at hand, and (3) developing a sketch outlining what’s needed to prevent a similar crisis from occurring in the future. These seem like intuitive tasks but it’s surprising how often the three aren’t part of a crisis management effort.

So who should read this book or, at a minimum, find it useful? Well, to begin with, the material in the concluding chapters illustrates what a crisis management plan might include and how material and experience gained by managing the crisis can be used to generate or at least update current operating strategies and plans so anyone invested in the organization’s future should find this of interest. Again, a good strategy is one that is always at the fingertips of those expected to manage an organization and its resources. So an organization’s leadership and managers can use the book material to view and treat a crisis as something to manage and sometimes improve the organization’s on-going operations.

Everyone associated with an organization has a “stake” in it so even those with a “cause” or “mission” that are in conflict with the organization may find the book’s material useful. This is an important point, for it means that even people who don’t like or care for a particular organization have a stake in the organization and its performance. Members of special interest groups who fight crime, terrorists or are against animal cruelty have a stake in organizations are engaged in illegal activities or whose business it is to raise cattle for slaughtering, use chickens to produce eggs, or breed dogs for racing or sale. Members of special interest groups have a stake in how these organizations, often their adversaries, operate so what they pull from the book may help their own organization’s performance or direction. Moreover, those in special interest groups have their own organizations to manage and their organizations are seldom crisis-free. So members of organizations on both sides of an issue should find the book’s material useful.

Those in law enforcement as well as healthcare providers, and legislators and regulators are also stakeholders in a variety of organizations. When an oil company’s well pollutes groundwater, when pesticides or chemicals get into the food we eat and cause sickness, sometimes even deaths, or even when airlines fail to respect the needs or rights of passengers, those in law enforcement, legislators and the like operate as stakeholders with a special interest.

Members of the media are often very active stakeholders. They are the conduits carrying and sometime shaping the flow of information about a crisis, and an organization and its brand. Members of the media often are key instruments for other stakeholders to use when attempting to get or create information about an organization and its brand. Stakeholders such as lawyers use the media to present their case to a wider audience just as those who perceive themselves as under attack use the same forum to present their case. More recently, the media’s role has shifted from merely presenting the news, perhaps with a few comments, to a more proactive, investigative role. Schools of Journalism throughout the United States are augmenting or shifting their course offerings to reflect this trend. Indeed, tracking ways entire communication disciplines are reengineering their mission and course-work to reflect the changing role of media stakeholders in contemporary America is not limited to one or two schools. Rather, a quick look at the websites at Columbia University in New York, California at Berkeley, Brandeis in Massachusetts, American University in Washington and the Univers...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• List of Illustrations
• Acknowledgments
• Part 1   The Organization, the Brand, and the Organization’s Stakeholders
• Part 2   Strategy and the Emergent Crisis
• Part 3   Implementing the Strategy
• Appendix A   Events and Organization Types: A Mini Case Study of Channeled Effects Triggered by Attempt to Destabilize a Community-Type Organization
• Bibliography
• Index