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  • Writer's pictureSteve Bowen

3 indicators of a real corporate crisis

Updated: Jan 3, 2023

‘Crisis’ is one of those words that gets thrown around quite a lot in communications.

“We have a crisis. There’s a negative article in [insert media of choice]!”

“We have a crisis. [insert influencer of choice here] has posted content that presents us in a bad light!”

“We have a crisis. Our stock price is down [insert red flag of choice here] in the last two days!”

I’m not saying that these don’t merit a communications response - although sometimes they don’t - but are they really ‘crises’? And what is a crisis anyway?

A crisis is any situation that warrants the leadership of an organization devoting the entirety of their time to its resolution, to the exclusion of all other interests. After all, that’s what is called for in most crisis manuals. But when everything is a crisis then the term loses its impact. Rather like the boy crying wolf, the more you use the term when it’s not warranted, the more you risk people not appreciating the urgency when it is used in earnest.

There are three indicators that suggest you are facing a crisis:

  1. Operational Disruption: Is the situation occurring outside the organization’s normal operating routine?

  2. Imbalance of Information: Do parties outside the organization have more information about the situation than the organization itself?

  3. Existential Threat: Does the situation threaten the continued viability of the organization in its current form?

If the answer to two of these three questions is ‘yes’ then it’s probably time to activate the crisis management team. If the answer to two or more of the questions is ‘no’ then you have an issue, maybe a serious issue, but not a crisis. Why is the distinction important?

Operational Disruption: If the situation is part of the organization’s normal operating routine then there should be processes in place to manage it. A situation outside the normal routine will require external resources to manage. These may need to come from government, partners, local emergency services, specialist companies or other sources. Marshaling those resources will likely require the support of the organization’s leadership in areas including opening lines of communication and alignment, approving expenditures and keeping relevant stakeholders appraised of what is happening. If the leadership is managing other day-to-day responsibilities, then those critical activities may be delayed, impeding the resolution of the issue.

Imbalance of Information: In most situations - even situations that go on to become full-blown crises - the organization knows more about its business than any outside party. Where this is not the case, it is usually down to one of two scenarios: either the situation on the ground is developing faster than the organization’s ability to manage it (for example a natural disaster or an industrial accident) or the organization is the victim of some form of external action (data theft or stakeholder activism, for example). Where the balance of information lies outside the organization, leadership needs to be expending every effort to fully understand what is happening so that they can make the necessary decisions to resolve the issue. If leadership’s attention is elsewhere, decisions may be either delayed or misinformed, either of which risks exacerbating the situation.

Existential Threat: This almost goes without saying - if the existence of the organization is under threat then obviously the full resources of the leadership should be devoted to preserving it. So why would this indicator alone not be sufficient to warrant a crisis? Quite simply because the majority of organizations that fail do so due to mismanagement, not external factors. In the normal run of operations, one of the many responsibilities of leadership is to ensure and enhance quality of management, adherence to compliance standards, financial accountability and so on in order to maintain and grow the organization. When the threat is external, as suggested by either of the other two indicators, then the leadership needs to focus its attention on addressing the threat without distraction. That is the definition of crisis.

None of this is to suggest that sustained negative commentary, stock price fluctuations, employee attrition, union action etc aren’t potentially serious issues. While they are not crises in themselves, they may well be indicative of a deeper problem. The job of the communications practitioner is to discern when this is the case and then take the necessary action.

All this framework does, of course, is tell you if a given situation warrants the designation of ‘crisis’ with all that entails. It doesn’t provide a method of assessing severity or guiding escalation. That will be the subject of another post.

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