The essentials of business crisis management. How to intervene and respond when something threatens the reputation of your business.
The word crisis is usually associated with natural disasters, such as earthquakes or tornadoes that often devastate and destroy communities. However, another type of crisis can be equally devastating for you and your business, known as a business crisis. This article will give you practical advice on preparing for it and managing it when it happens. We will discuss what you have to do and how you should respond to intervene when something threatens your business’s reputation.
1. What exactly is a business crisis?
Let’s start by defining what exactly is a business crisis. Simply put, it is an event that can damage a company’s reputation and threaten its success. In addition to this, it can harm the company’s employees, hurt its finances, or threaten the company’s various business operations.
2. What causes a business crisis?
Both internal and external circumstances can serve as the cause of the business crisis. Because the crisis can cause severe damage and have a long term effect, it is vital to have a crisis management plan in place before one occurs.
3. What does crisis management mean?
Crisis management means unexpected situations arise and can negatively affect your business and need to be dealt with as soon as possible. If you fail to do so, it can impact your revenue and your shareholders, customers, and employees. Dealing with these types of disruptive events is called crisis management, and it should be a vital component of your public relations strategy.
4. How exactly do you manage a business crisis?
You need to take several steps in order to manage a business crisis effectively.
- The first step you need to take happens before the crisis even occurs, and it involves you creating a business crisis management plan and assembling a team. It is highly recommended to hire a team of professionals that will manage any potential crises for you.
- After you and your team agree on your crisis management plan, you should test it by conducting several practice exercises to determine your plan’s effectiveness.
- Another thing you have to do is have your team draft several communication messages that are used in an emergency. Having these messages written in advance will save you valuable time when the crisis occurs.
- If you and your crisis management team have created a comprehensive business crisis management strategy, you should immediately act after the emergence of the crisis. Release the messages created for the management of the crisis, contact your shareholders and employees, and make your company’s safety your priority.
- After the crisis subsides, your crisis management plan is still essential to your business success. It is vital to make yourself available to answer any questions and maintain contact with your customers, employees, and the company’s shareholders. In addition to maintaining contact, send frequent updates to all interested parties.
5. What is a business crisis management plan, and how should you go about creating it?
A specific, predetermined process that a business should follow when dealing with an unexpected and potentially damaging situation is called a business crisis management plan. It should be created with experienced public relations professionals and activated after becoming aware of the crisis to minimize the damage to your company immediately.
- To create a successful business crisis management plan, you and your team should start by identifying all possible crises that can negatively impact your business.
- After that, think about what type of impact each of these crises can have on your business.
- Next, think about the actions that would be needed to resolve these crises successfully, minimizing impact.
- Decide who should be involved in each of these scenarios (all relevant staff members should familiarize themselves with your plan).
- After your PR team has finished creating a comprehensive business crisis management plan, it is essential to revisit and update your plan occasionally.
There are various types of crises that can affect your brand. Let’s look at some of the different kinds of crises that may cause your brand problems.
- Financial: happens when the service or the product that the company offers to its customers is no longer in high demand. In this case, the companies assets lose value, and they may not be able to afford to pay back what are they owe.
The organizational crisis.
Organizational crises occur when a business has done something that hurts their customer base. An example of this may be businesses hiding important information, or another type of customer deception usually benefiting the company.
Environmental: floods, earthquakes, tornadoes, and hurricanes are examples of natural disasters that may cause a crisis in your company. All of the aforementioned natural disasters can ruin a company’s office space (or indeed any real estate owned or rented by the company). Some companies are more prone to succumbing to these types of crises only due to their property location.
Business reputation crisis.
Product recall: When a certain percentage of your products are defective, and you need to take them out of circulation, it can have a devastating effect not only on the flow of revenue but also on your brand’s reputation. We all remember the exploding Samsung mobile phone fiasco, which impacted the companies profitability.
Bad reviews: Nowadays, with applications like Yelp, every customer is also a critic. Their opinions about the products or services your business provides can be accessed globally.
Twitter faux pas: Social media posts have been responsible for some brands’ undoing. None more so than Twitter. One inappropriate or even an improperly timed tweet from a company’s official account can generate a severe backlash or, in some extreme circumstances, also cause a nation-wide boycott of your brand.
Business crises caused by technology.
Hacked: Online security has been an increasing concern for companies. If your clients trust you to store their sensitive information in your database, then someone managing to steal that information would irreversibly break that trust and cause enormous damage to your brand’s reputation.
Having your official social media account hacked is another scenario that can trigger a business crisis. Recently dozens of verified accounts on Twitter were successfully targeted by hackers who managed to persuade the accounts’ followers to get entangled in a Bitcoin scheme. This crisis requires immediate action and a combined effort from IT and PR professionals to manage it.
Technological crash: If the software or the hardware your company relies on to do its business malfunctions, you can lose all contact with your clientele. If your clients rely on your technology to do their business effectively, they may not wait for you to fix the bugs and issues. If you fail to address their concerns as soon as possible, you may find that they have moved to your competitor.
Negative press / online content.
If a negative story about your brand gets out, it will deter any potential customers and make your shareholders uneasy. You may mitigate the damage leveraging media relations, coaching and consulting to tell your story overshadowing the negative press
Online content: It may reach a wider audience and provides information fast and efficiently. If a damaging story appears on the first page of Google, you should do everything you can to present your brand positively. Hopefully, this will push down the negative contents out of the search results. Out of sight, out of mind.
Social justice impacts.
Social justice: issues have been steadily gaining momentum because people are no longer afraid to tell their stories and the injustices they experience. If your branding is offensive, it will lead to backlash and possibly a boycott of your products and services. Diversity and inclusion should be deep-rooted and integrated throughout your brand.
Misconduct: when people closely associated with your brand accept bribes, participate in insider trading, or engage in any other illegal activity and the information of them doing so leaks, leading to a severe crisis that requires your immediate attention.
Harassment: another example of misconduct would be engaging in any type of sexual harassment of subordinated employees. This type of crisis may occur either in the workplace or out of it. When the crisis of this nature erupts, it will require your immediate attention and swift actions from your PR team.
All of the crises mentioned in this article (and many more that could potentially erupt) can damage your brand and negatively impact your business operations. Having a professional PR team and a comprehensive action plan will help you evaluate and manage the crises.
7. Which intervention and response techniques are best to manage a business crisis?
To determine successful intervention and response techniques, you and your PR management team should know approximately what kind of impact each of the crises potentially has on your business.
In some cases, a business crisis may significantly reduce (or even total loss) of sales. In other cases, it may cause dissatisfaction among customers, which will negatively impact customer loyalty for your company (needless to say, this will result in lower sales) of your brand. And last but not least, a business crisis can ruin your brand’s reputation.
Reputation management is another critical component of a good PR strategy.
8. What are the critical aspects of reputation management?
As useful as modern technology has been in some ways, it has undoubtedly made it more challenging to manage your reputation and contain negative news. If something negative happens within your company and it leaks out, it can spread on various media outlets in minutes. To manage your business’s reputation effectively, you must get ahead of the story and guide the dialogue as best as you can.
First, make sure to get as much positive content out there as you can. If you have a corporate website, are active on blogs, and have established a strong presence on social media platforms, you will have the opportunity to raise awareness of your brand and quickly move on from any potential harmful incidents.
In the event of a public incident, acknowledge the mistakes that have been made and afterward keep flooding the internet with positive information about your business. For example, you could post several blog posts that highlight customer success stories, talk about your business’s charitable organizations, or attract your customers’ attention to a new product. Do everything you can to push the damaging story off Google’s first page, and hopefully, soon, it will be behind you.
Another way to intervene and respond when your company’s reputation is in danger of being tarnished is to connect with your customers and perhaps even ask them to help you fix the issue.
Let’s take Gitlab (a firm that develops software), for instance. In Gitlab’s case, client data was accidentally deleted from the company’s server by an employee. This incident harmed thousands of clients and endangered many expensive projects. To deal with this crisis, Gitlab told its customers what happened immediately and later on kept them constantly in the loop. Also, they worked together with their customers to fix this problem. Due to the swift response and a high level of transparency and honesty on Gitlab’s part, there was no irreparable damage caused to its reputation, and customers kept the worst of their anger at bay.
Moreover, you should also manage the online presence of your company’s executives. They can have a severe impact on the reputation of the company itself.
For example, the founder of Uber, who used to be its CEO, was criticized for a number of personal mistakes and the management style employed within the company.
If the company’s high-level executives suffer from a negative reputation, this will undoubtedly impact the reputation of the company connected with them.
Not only must you discuss with your executives how they should respond to any potential crises, but you must also have your public relations team keep an eye on their online presence. In the age of social media, keeping a low profile online is not possible, so it is better to be ahead of the curve and establish a positive online presence for your company executives.
9. Stronger together.
One more thing you must do to save your company’s reputation is to present a unified front in case of a crisis.
Let’s imagine a situation in which you have done everything you can to prepare for the potential crisis.
There is a predetermined plan of action, and you have drafted all the critical messages. But at the last minute, one of your executives decides to give an impromptu interview and delivers a message that contradicts the approved plan.
This type of mistake causes your crisis response to go off the rails, but it can also severely damage your company’s reputation. If your customers start hearing different stories from different sources, they will assume that the internal organization is in a state of chaos. They will also assume that your brand is untrustworthy.
Whenever you decide to assemble a crisis management team (as you definitely should), it has to include a public relations specialist and somebody who can advise you on human resources.
Specialists and firms that specialize in business crisis management, crisis intervention, and response and reputation management will help your company overcome the crisis by maintaining contact with your customers and your employees. They will also manage the messages that go out to your social media followers and press.
Experiencing a crisis is an inevitable part of doing business today. All companies have to deal with one or multiple crises, whether it’s a minor or a major one, and in today’s extremely competitive environment. Don’t be caught off guard. Assemble your crisis management team and start putting a comprehensive plan in place long before you need to follow it.
If you want to know more about business crisis management contact us.