By 9:30 a.m. he and his senior executives had convened at a backup site that became their command center. The decisions made by Scott and his team that day would make Morgan Stanley a case study in successful crisis management and would enhance Scott’s reputation as a leader.
What is the difference between a Morgan Stanley and less successful companies? Why do some organizations come out of crisis with enhanced reputations while others may not even survive as a business? While the reasons are many and varied, it frequently comes down to three main areas:
- Failure to consider the human factor
- Failure to gather adequate information to support decision-making
- Failure to act quickly and decisively
These failures are so common that they suggest three keys to successful crisis management.
Recognize that you are your own worst problem
Too often in preparing for crisis one tends to ignore the human factor. Understanding human nature and how people react to crisis is one of the fundamental keys to crisis management.
No matter how much information on risks they are given, people do not believe that a crisis will happen to them. They may understand it intellectually but viscerally they do not believe it will happen. This hampers their willingness to prepare for crisis.
When confronted with a crisis, a person’s first reaction is denial – they often do not recognize that a crisis is occurring. This leads to a hesitation to act.
There is a tendency to normalize crisis, that is, to see what one expects to see rather than what is actually occurring. It is easy to misinterpret or completely miss indicators that a crisis is imminent or occurring. These indicators may be obvious after the fact but are easily missed during the crisis.
Good information is essential to good decision-making
The second phase that people experience when confronted with a crisis is deliberation – the need to seek corroboration about what has occurred or is occurring and to consider courses of action. There are, however, problems inherent in this process. Most information available in the early stages of crisis is fragmentary, contradictory, and unreliable. There can also be a considerable volume of information available, most of it not really helpful. Sorting through this mess requires an understanding of what information is important and why it is needed by decision-makers.
A common failing in crisis is the tendency to seek only information that confirms what the crisis team thinks is happening or expects to see happening. The problem with this is that the team misses the true nature of the crisis and makes decisions that can be counter-productive or flat out wrong. The paradox of information collection is that while the better the information, the better the decision-making, there will never be a situation where one has all the information needed. At some point, you will have to make decisions based on incomplete information. Information collection cannot become an end in itself that delays decision-making.
Overcoming denial and moving through deliberation leads to action. In most cases, the quicker you are seen to act and to provide information on the crisis and your actions, the more likely you are to mitigate the effects of the crisis. Effective action depends on a number of elements:
- Isolating the crisis by identifying a crisis management team and dedicating them solely to the crisis. Other parts of your organization can be devoted to business as usual but your crisis management team must be focused exclusively on the crisis and must have the authority and resources necessary to act.
- Speed is essential, particularly in crisis communications. Depending on the nature of your organization, you may have only minutes to get your story out. Even if it’s just acknowledging that the crisis has occurred and that you are assessing the situation it is critical that the public, your employees, and your shareholders hear from you.
- Acting quickly, demonstrating empathy with anyone affected by the crisis, and, above all, being honest can go a long way to countering the negative effects of a crisis.
Surviving a crisis requires that you quickly recognize and accept that a crisis is occurring, gather sufficient information to make decisions regarding the crisis, and move quickly to implement those decisions. Incorporating these three keys into your preparations for crisis may not guarantee success but they will certainly go a long way to preventing failures.