How a Crisis can be Good for Business

Posted by martin.parnell |
How a Crisis can be Good for Business

During the recent period of Chinese New Year celebrations, I was researching all things Chinese when, out of the blue, I came across the above quote. A crisis in business can be devastating, if not handled properly. It may arise from one single event or a series of them and could, in extreme, become a threat to an organization’s very existence. 

A crisis can develop over time and occur due to the failure of staff or management to identify when things are not working. It may also be due to one, unexpected, significant event. It’s important to be able to recognise when a crisis is developing and to deal with it, you need to have formed a strong leadership team, keep employees and stakeholders informed and deal with any media with an air of positivity and control. 

This will make sure everyone is kept up-to-date with what is developing and how it is being dealt with. In these days of social media, the way a crisis is handled can make or break a reputation, either of an individual or a company. Whichever way it manifests, it’s important to deal with it quickly and efficiently. This is why some companies have a Crisis Management Plan and can draw on it at any given time. If you do have such a plan, it’s important to keep it updated and review it at timely intervals. The implementation of such a plan can save a lot of time, stress and even money. 

Of significant importance is the ability of your company to recognise when a crisis occurs. It may not be as obvious as one might think. Also, there is a difference between a company that is failing and one that is facing a crisis. If you cannot pay your overheads, you have an unusually high rate of employee turnover, you cannot pay salaries to yourself or your employees and you’ve lost enthusiasm to promote your product, you may be failing, whereas, crises are deemed to be negative changes, especially when they occur abruptly, with little or no warning.

Crisis has several defining characteristics. Seeger, Sellnow, and Ulmer(Seeger, M. W.; Sellnow, T. L.; Ulmer, R. R. (1998). "Communication, organization, and crisis". Communication Yearbook.),  say, amongst other things, that three characteristics are that the event is

“1. Unexpected (i.e., a surprise)

2. Creates uncertainty

3. Is seen as a threat to important goals” 

If you are an employee, you may want to be aware of warning signs that your company is in crisis.

In a post on LINKDIN from Adjunct Professor, Academic Mentor, Education Technology Specialist, Court Mediator, Tom Moyer entitled : 12 Signs That Your Company Could Be in a Financial Crisis, Published on March 1, 2015, Moyer suggests the following may be signs that this is the case:

  1. Changes in organizational structure such as large department mergers, a marked increase in staff to manager ratio or a new and highly streamlined management team. These are often front-end attempts to right the ship and they sometimes work.
  2. A noteworthy increase in staff and manager stress levels evidenced by a big increase in workload, flaring tempers, increasing frustration with assignments and long work hours. While this can be a regular occurrence, a prolonged episode can be a glaring sign of trouble.
  3. Inadequate staffing of departments and scheduling - Staff are asked to double or triple up on workstations on a regular basis and changes in work assignments and rotations increase dramatically.
  4. Work backlogs - Despite best efforts, the work isn't getting done. Something has to give and as the backlog grows, so does the gravity of the situation and the number of mental meltdowns.
  5. Increased attempts at self-preservation which leads to turf wars, power struggles and infighting - This tears at the very fabric of organizational cohesiveness and it's sure to rattle the nerves of everyone involved. With this comes an inevitable drop in employee morale and productivity.
  6. Hiring freezes and unfilled positions - These are often last-ditch attempts to rebalance the company. The situation can be aggravated by increased employee turnover and unsuccessful recruitments which are driven by abysmal hiring pools for jobs with low salaries and lousy benefits.
  7. Hostile work environment - This is a term bandied about by stressed-out employees. While it conjures up an image of a slave-driving boss, it's often marked by a significant increase in disability claims for mental stress caused by moody coworkers and bosses, aside from a crummy work environment.
  8. Sacrificing customer service for economy - This only accelerates the slide downhill because without customers, you don't bring in money to pay salaries and keep the lights, heat and computers on.
  9. Sacrificing work quality by replacing humans with machines - Witness the endless maze of voicemail often encountered when contacting a cable provider or government agency and there's no chance of talking to a live person. Or think of an online return policy that makes it next to impossible for a wrong to be righted. If you're a customer and you can't talk to a human being to get things fixed, you're taking your business elsewhere.
  10. An increase in Human Resource issues such as questionable disability and workers' comp claims, an increase in personality clashes between staff and managers and a jump in performance improvement programs and harassment claims.
  11. Reductions in benefits and salary freezes that spark early retirements, mysterious resignations, unexplained leaves of absence and outright terminations.
  12. Mandatory work furlough days or use of vacation during slow periods when organizations can operate on thinner staffing such as Christmas and New Year.”

Moyer does point out that “Taken individually, these signs may not mean much, but together they can form a distinct picture of an organization in crisis.” And he suggests you may want to take action;

“So, if your company is in dire straits, think about what you will do now to avoid the calamity to come and set yourself up for a successful transition. Create a plan, make lifelong learning a priority and act pre-emptively to increase your odds of success. That way you'll be ready to jump into hyper drive once you know something definitive about your organization's plans. And there's no better time to start this process than right now.”

Which leads me to the final part of Kennedy’s quote.

If your company is facing a crisis, once the issue has been dealt with, it can have a positive side. Valuable lessons can be learned from the way the crisis is dealt with.  It can actually lead to a better insight as to how the company functions and where weaknesses lie.

First, you need to ask these questions: Why/How did this crisis occur? Was it preventable? Did it develop over time or was it due to a significant event? What effect has it had on the company, its customers and employees? How can we prevent it from happening again and, if you have a Crisis Management Plan, was it implemented and was it effective?

It may lead you to take action resulting in positive outcomes. If you do not have a Crisis Management Plan, maybe it’s a good time to develop one. Perhaps you or your employees developed skills using initiative and creativity to solve the problem. It may have brought people together. It quite possibly gave you the opportunity to make changes that are beneficial, including ways to improve your company’s customer relations, productivity, efficiency and image. 

It can also help dispel any illusions you may have had about how you, your employees or your company reacted and it may provide the opportunity to set new goals and assess your values.

About the Author

Martin Parnell is the Best-Selling author of MARATHON QUEST and RUNNING TO THE EDGE and his final book in the Marathon Trilogy, THE SECRET MARATHON-Empowering women and girls in Afghanistan through sport, was released on October 30th 2018. He speaks on having a “Finish the Race Attitude – Overcoming Obstacles to Achieve Your Full Potential” and has written for, or been covered by CNNBBCCBCThe Huffington Post, The Globe and Mail, The National Post, Runners World, Men’s Journal, Canadian Business, and Maclean’s.

In a five year period, from 2010 to 2014, Martin completed 10 extreme endurance “Quests” including running 250 marathons in one year and raising $1.3m for the humanitarian organization Right To Play. In 2016 he ran the Marathon of Afghanistan in support of Afghan women and girls running for equality. Find out more about Martin at www.martinparnell.com  and see what he can do for you in the long run.

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