There are times when a business faces a crisis. With the spread of the COVID-19 pandemic over the world, for many companies and stakeholders, such a time has come. We’ve all experienced the impact of coronavirus. But for businesses, it’s way worse than just being stuck at home.
What to do and how to handle crisis management in such a difficult situation? How to maintain business continuity? You need the right strategies that will guide you through a difficult time.
What Is Business Crisis Management?
When an unexpected event disrupts your company’s peace, it threatens the organization and the stakeholders. You need to act quickly – find the best way to avoid the threats and terminate the crisis as soon as possible.
And that is business crisis management.
It’s a practice similar to risk management; however, as Jodie Willmer, a specialist in strategic planning, governance and risk, defines the main difference between the two. In risk management, you need to “identify, assess and mitigate any activity or event that could cause harm to the business.” In contrast, crisis management is related to “responding to, managing and recovering from an unforeseen event.”
How Do Organizations Manage Crisis?
According to Fairgodboss, there are three types of business crisis management:
- Responsive crisis management: preparing a robust crisis management plan, so when the critical period comes, the company has all the necessary means to handle it. It can usually be observed at organizations with strong company culture and a solid business plan template
- Proactive crisis management: this type of operation happens when a business is expecting the crisis to happen, it prepares a management crisis plan, and implements it accordingly
- Recovery crisis management: this type adapts an approach where a company determines the cause of the crisis that it’s facing and takes relevant actions to resolve it
These, of course, are traditional approaches to crisis management. However, in an unexpected turn of adverse events, it may not be easy to adopt such strategies. That’s where you need to refocus your actions on more extravagant techniques. But we’ll talk about it in the further part of the article.
Some businesses have a dedicated crisis management team whose purpose is to prepare specific crisis management plans and coordinate all actions related to it. Employees with specialistic knowledge, skills, and understanding of the crises constitute such a team. These may be executives, project managers, and employees with the right skill set who also have an in-depth knowledge of public relations and its connection to the business and customers.
Don’t forget that if you’re facing a crisis, you need to take care not only of your employees but also customers.
This standard is adapted mostly on the corporate level, where many employees are hired, and large amounts of money are generated every day. Such companies also require reliable management coverage due to the complicated structure of organizational processes. While in the case of smaller businesses, crisis management may not be part of the company strategy.
What Are The Types of Business Crisis
Knowing what type of business crisis your company is facing can help you maintain business continuity.
Your company may be affected by various types of crises. Here are some of the most common:
Leadership crisis
Happens when there are no people to lead a company, or the leaders do not have needed qualifications.
HOW TO FIX IT? Lolly Daskal, the most sought-after executive leadership coaches in the world, says, “For leaders at every level, in every situation, bringing out your best means leading from within—thinking of others above yourself.” Her approach, you need to “lead in ways that make a positive difference.” Communicate, decide, and act quickly, and above all, be there for those who need you most and manage relationships.
And don’t forget to take care of yourself, “The best leaders take care of others, especially in challenging times. But if you neglect yourself you will soon be overwhelmed by pressure. Do what you need to do to keep yourself sharp and healthy, and remind yourself often that what you do is valuable.”
Communication crisis
It is a result of poor information flow and lack of collaboration between team members, management, or employees, even clients.
HOW TO FIX IT? You need to develop a strong organizational brand culture so people can feel safe, appreciated, and are happy to work. “Dig deep into organizational culture and service delivery and you’ll find that new lows in brand experience always start at the top,” says Stephen Rosa from Addventures.
Management and planning crisis
A situation when a company has difficulty in managing its employees and the workflow due to unskilled project managers or for other reasons.
HOW TO FIX IT? Reevaluate the system in which management happens. If your company is experiencing this crisis, it means it’s deeper than you think. “Crises are systemic. You can’t just point to one person or one single cause, it’s the whole system. Which means your solution needs to be systemic,” claims Ian I. Mitroff, an internationally recognized crisis management expert.
Financial crisis
May concern the lack of funds, improper spending of money, or having loans and debts that drain the company budget and make it difficult to make ends meet.
HOW TO FIX IT? Make an audit of company finances, budget, overhead expenses. Try to cut unnecessary costs. You can also reach out to investors or the board of directors and ask to consider financial assistance.
Personnel crisis
This crisis may take different forms:
1) when a company cannot find suitable employees,
2) when an employee has engaged in illegal activity that threatens the well-being of an organization.
HOW TO FIX IT? Work on organizational culture in your company and whether employees stick to it, “Culture is a social control system. Here the focus is the role of culture in promoting and reinforcing ‘right’ thinking and behaving, and sanctioning ‘wrong’ thinking and behaving. Key in this definition of culture is the idea of behavioral ‘norms’ that must be upheld and associated social sanctions that are imposed on those who don’t ‘stay within the lines.'” writes IMD Business School professor, Michael D. Watkins.
Technological crisis
when technical issues impact the functioning of a company, for example, the network breaks down, or servers stop working.
HOW TO FIX IT? The solution to this problem is simple – invest in proper equipment and data recovery software, work with the IT department or provider to avoid potential issues.
Natural disaster crisis
Related to events happening outside of the business but having an impact on the company, eg., tornadoes, floods or the current pandemic of coronavirus
HOW TO FIX IT? A natural crisis could happen out of the blue, so you need to take a proactive approach. If your office is located in a hazardous area, build a special, nature-resistant office. Prepare a plan on how to operate in difficult times to be ready when the crisis comes.
Organizational crisis
When the company is not treating the customers properly, mishandling confidential information, or not taking care of public relations.
HOW TO FIX IT? Here, organizational culture also plays a crucial role. Redefine your strategy, employees’ attitude and how they treat your customers. Hire people who are reliable, accountable, and respect values.
Every business may experience a different crisis or even many of them at the same time.
The most important thing, however, is to identify it and react to prevent failure quickly.
Strategies to Guide Your Business Through The Emergency
If you’re in the midst of a crisis, it may be hard to create the right crisis management plan.
To help you swiftly fix your situation, here are 5 simple strategies that can help you survive a difficult time without jeopardizing your company, employees, and customers.
1. Harness the Power of Data
Ronald Coase said: “Torture the data, and it will confess to anything.” Data can give you all the information you need about your business, the market, and your clients.
A data management expert, Rick Buijserd, points to the importance of “data temperature” – hot, warm, cold, and frozen data. These are the phases your data is in, and they define its importance. It can help in prioritizing your actions based on the data value.
Collect all the data, numbers, statistics relating to your business activity. Group it into categories, select the essential information, and structure it all. That will help you establish the right crisis management plan optimal for your company.
For example, with time tracking software, you can monitor the amount of money that is being spent and track expenses against estimates. You can cut costs by optimizing the duration of activities by categorizing them into billable or non-billable and productive and unproductive. It can work as a data management system that gives you deep insight into your company status in real-time.
Manage the information you already have to evaluate threats, opportunities, weak and strong spots in your performance, customer behavior, and more. If you use AI and advanced analytics, you can optimize your spendings to drive maximum results.
Additionally, gathering the key information to forecast the risk can help avoid the black swan effect – an unexpected negative event that could have been prevented.
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2. Look for Ways to Collaborate
One of the ways to get to grips with a lousy situation assumes reaching out to potential partners. When your product or business is not selling well, try to collaborate with other brands.
You can become an affiliate partner, and resell a product, help users in onboarding or engage in joint activities that will boost sales. There are many options, and the choice depends on the type of cooperation and field of operation.
Moreover, not only can you create a new, fruitful partnership but also reach a wider audience. And it works in both ways, so there is mutual benefit for all.
It may not cover all your costs, but it will surely provide business continuity and help you stay on track.
3. Treat Crisis as Opportunity
The crisis causes chaos, and sometimes among the confusion, there are new opportunities.
For example, now, in the face of the coronavirus pandemic, many organizations were forced to switch to a remote workstyle. Yet besides necessity, it also a chance to open for new possibilities that have been lying dormant for a long time. Maybe these are new marketing priorities, adopting a different business model, or working with customers and stakeholders on a different basis?
The coronavirus pandemic crisis showed Goldman Sachs that changing the workstyle can bring many benefits. “When you go through something like this, it forces you to ask questions and think about things differently.” Said David Solomon, the CEO. “It will make us more comfortable in providing more flexibility to employees, which, by the way, makes this a more attractive place for people to work.”
A crisis is a crucial moment to rethink what your priorities are and what drives the business. Shifting priorities under challenging times can boost your company’s growth and provide stability.
4. Reach Out to Professional Institutions
If you don’t know what to do and overcoming the crisis is too difficult, you can turn for help to institutions that deal with crisis management. It’s alright to ask for help.
You can reach out to organizations, institutions, or professionals who act as advisors on crisis:
> Turnaround Management Association (TMA) – TMA members are a professional community that seeks to strengthen the global economy by working to save distressed businesses, assist management in navigating off-plan events, and help good companies avoid similar pitfalls.
> The International Association of Emergency Managers (IAEM), which has more than 6,000 members worldwide, is a non-profit educational organization dedicated to promoting the “Principles of Emergency Management” and representing those professionals whose goals are saving lives and protecting property and the environment during emergencies and disasters.
> The British Standard – BS 11200:2014 Crisis management. Guidance and good practice – outlines means that help to create a good crisis management plan.
5. Leverage Technology
A company can’t function without technology. It’s the vital driving force of the business world.
Here’s how technology augments it:
- Helps to maintain data flow and their proper management
- Enables faster delivery of products and services
- Increases productivity and efficiency
- Helps to monitor the progress of work, employee engagement, and overall performance of people
- Gives insight into the state of the business
- Reduces costs by automation and optimization of processes
- Helps to stay connected with clients, stakeholders, other team members
Don’t strain from using new tools, especially if they have the potential to help in business crisis management. Without the digital transformation, you won’t be able to keep up with the fast pace of the business world and will eventually get to the point of no return.
Experts unequivocally say that technology will change not only how we live but also how we work. And to maintain business continuity, you must follow the latest trends.
Conclusion
The potential crisis can negatively affect your business and make it difficult to recover from failure. Whether you’re experiencing it now or are expecting the turbulence in the future, try to stay positive, keep the integrity, and be open to new solutions.
To avoid a business crisis, it’s best to prepare a business crisis management plan and update it regularly. As the saying goes, prevention is better than cure.
Stay strong and don’t let the crisis get you off the stage!
Due to the coronavirus world is literally lockdown. This causes a global crisis and small or mid-size businesses are facing real trouble to overcome this. This guide is very impressive to read about surviving a difficult time without jeopardizing your company, employees, and customers.
Entrepreneurs try to prepare companies for a crisis. The crisis caused by the coronavirus is powerful. It was impossible to prepare an organization for this.