LEADERSHIP
Managing A Crisis
By Joe Nyutu
When the US stock market
crashed on October 29, 1929,
shock waves collapsed markets
worldwide. Three years later, 15 million
Americans were out of work - one out
of every three people. Capital investment
dropped from $10 billion in 1929 to $1
billion in 1932. Farm income plummeted
60 percent. Worldwide gross domestic
product (GDP) fell by 15 percent.
The day before Franklin D. Roosevelt’s
(FDR) inauguration, banks in 32 of the
country’s 48 states had closed. Deposits
evaporated. Money was useless anyway -
there was nothing to buy.
On Saturday, March 4, 1933, gloomy
skies matched the nation’s mood at FDR’s
inauguration. Yet he radiated optimism.
In his address, FDR proclaimed he would
speak with “candor,” lead with “vigor,” and
act “boldly.” He assured Americans of his
“firm belief that the only thing we have to
fear is fear itself.” As he spoke, sunshine
emerged!
He took urgent and bold action to save
American from ruin. “The country
needs - and, unless I mistake its temper
- the country demands bold, persistent
experimentation,” he told the American
people. “It is common sense to take a
method and try it: If it fails, admit it
frankly and try another. But above all, try
something.” FDR managed a crisis well.
Remember when Covid-19 hit town in
March 2020 or thereabouts it created a
crisis. A crisis is anything including an
event that has the potential to significantly
impact an organization.
Coombs (2007) synthesized several
definitions and perspectives of the term
“crisis” and defined it as “the perception
of an unpredictable event that threatens
important expectancies of stakeholders
and can seriously impact an organization’s
performance and generate negative
outcomes.”
There are three key elements to this
definition. First, a crisis is a perception.
Even if an organization does not believe
that a crisis exists, ultimately the public’s
It is important to be informative because
the media as well as the public will create
their own rumors if no information is
given to them by the organization in crisis.
Rumors can cause significantly more
damage to the organization than the real
truth.
perception is the reality of the situation,
and if the stakeholders believe a crisis
exists, then a crisis exists. Penrose (2000)
studied the role of perception and
concluded that the public’s perception
of the crisis is a critical element in crisis
planning and will affect crisis outcomes.
Second, while a crisis is unpredictable,
it is not unexpected. Organizations
that effectively plan for crisis can better
anticipate when a crisis hits, and therefore
can lessen the damage of a crisis.
Crisis management is the overall
coordination of an organization's response
to a crisis, in an effective, timely manner,
with the goal of avoiding or minimizing
damage to the organization's profitability,
reputation, or ability to operate. Crisis
management involves identifying a crisis,
planning a response to the crisis and
confronting and resolving the crisis.
Crisis management has four objectives
which involve reducing tension during
the incident; demonstrating corporate
commitment and expertise; controlling
the flow and accuracy of information; and
managing resources effectively.
The common features of a crisis include
a situation materializing unexpectedly,
decisions are required urgently, time is
short, specific threats are identified, urgent
demands for information are received,
there is sense of loss of control, and
pressures build over time, routine business
become increasingly difficult, demands
are made to identify someone to blame,
outsiders take an unaccustomed interest,
reputation suffers and communications
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MAL37/20 ISSUE