How to Manage a Business Crisis in Seven Steps

How to Manage a Business Crisis in Seven Steps

Lots can go wrong when you run a company. For example, a staff member calling in sick is enough to add hurdles to your day. Fortunately, many roadblocks are easy to overcome. Asking another employee to fill in when one is sick, for example, is a reasonably easy solution. However, not all problems are as easy to solve. In fact, some may even evolve and grow into crises. In an organizational context, a crisis is an unplanned situation that causes major disturbances to the organization and the people within it. Of course, no business ever wants to face crises, but if you find yourself facing one, being prepared and knowing what to do before it hits can help it blow over quickly and with as little damage as possible. Here’s how to manage a business crisis:

  • Develop a plan before crises happen
  • Put together a team
  • Identify the type of crisis
  • Embrace leadership best practices
  • Train your employees
  • Communicate with your audience
  • Review and update your plan

Develop a Plan Before Crises Hit

Crisis management plan on a laptop

If you start developing a plan for dealing with a crisis after it has struck, it’s too late. Your responses will be delayed, mitigation will be slow, and the overall effects will last for a longer period of time. The best way to manage a business crisis is to plan for it before it even happens. To start creating your plan, first let your imagination run wild. Come up with any type of crisis you can imagine affecting your business (more on that below) and write it down. From there, pre-write key messages, apologies, tweets, and more. List the groups of people who will be affected and how best to reach them. Include projections for best and worst-case scenarios and practices to implement to mitigate the negative effects each crisis may have. The better you pre-plan your courses of action, the faster you can start taking those actions.

Put Together Teams to Manage a Business Crisis

Team of people in a conference room

If your business is small, your team might be just you, or you and a couple other people. However, the larger your organization, the larger your team(s) must be. Start at the top of the organization for your main team. This group of people will typically be the ones that speak publicly about the crisis. Chief officers (executive, operations, etc.) and directors (of communications, marketing, customer service, etc.) should be included. These people should have a deep understanding of their roles in a crisis situation. For example, the Director of Communications will probably be the one to release a statement on social media. Make sure all team members are on the same page regarding key messages.

From there, you can organize other teams just to help handle the load. For example, your lower-tier managers will be a great channel to communicate to general employees. Because every business is different, plan your teams for your needs.

Identify the Type of Crisis

Question marks asking about the crisis

Before you can manage a business crisis, you need to know what type of crisis you are facing. In general, there are nine different ways to categorize crises. Some may even fall into multiple categories. The categories include:

  • Natural Disasters: A natural disaster is an event beyond your control that may affect your organization. For example, a flood may cause your head office to close, thus interrupting operations. Other examples of natural disasters include earthquakes, hurricanes, tornadoes, forest fires, blizzards, volcanoes, and more.
  • Technological Crises: This particular crisis situation is caused by a technological error, which can be internal or external. For example, a hacker breaching your system and stealing customer data is a technological crisis caused by an external factor. An employee accidentally sending an email but forgetting to BCC the recipients may be an internal cause. Other examples include viruses, payment machines not working, etc.
  • Personnel Situations: If an employee is the root of a negative situation, it’s known as a personnel crisis. For example, a manager harassing staff has the potential to become disastrous for a company. Other examples include sexual harassment, mass staff walk-outs, and more.
  • Organizational Misdeeds: An organizational misdeed occurs when a business as a whole engages in bad or misleading practices. For example, selling customer data to third-parties without disclosing that practice may trigger a crisis if the practice is discovered. Tampering with data, lying about use of funds, and more are other examples of organizational misdeeds.
  • Financial Disasters: A lack of funds in a business can cause a range of crises. For example, having to lay off staff because you can no longer afford to keep them on payroll may be a crisis. Other financial disasters include being unable to pay creditors, and having to declare bankruptcy.
  • Competition Crises: If your competitors make a statement about your business or industry, it may affect you negatively whether or not the statement is true. For example, a competitor may claim your product uses certain unsafe chemicals, which can trigger a crisis.
  • Confrontational Situation: If a group (or groups) of people is making demands for changes to your business practices, this may result in a confrontational situation. For example, protesters demanding that a cosmetics company stops animal testing may be a confrontational situation.

A crisis will also fall into one of two timeline categories.

  • Sudden Crisis: The situation occurs abruptly and without warning.
  • Smoldering Crisis: The situation has been brewing and there have been warning signs that it would happen (examples include changing customer attitudes, increased customer or employee complaints, etc.). This situation can be prevented but usually isn’t due to neglect, ignorance, or ego (hence the fact it became a crisis in the first place).

Embrace Leadership Best Practices

Leader businesswoman in office

A company’s response to a crisis is only as strong as its leadership team. Poor leadership will lead to lack of cohesion in messaging, delayed actions, and more chaos in general. Do your best to embody the values of your company to lead by example, be available to the public, encourage your team, and remain publicly poised and collected even if you feel anything but.

Train Your Employees

Employees in a training session

Crises create hectic times. This is true for you, and also for all of your employees, especially because they may not have all of the information, or know how they should respond. If someone asks an employee a question and they’re unprepared, their response may cause the crisis to worsen. Take the time to inform your staff of the things that are happening, and train them on how to respond to people outside of the organization, by coaching them through key messages or simply having them refer questions up the chain of command.

Communicate With Your Audience

Tin cans for communicating

In a crisis situation, businesses need to respond as soon as possible. Some estimates recommend taking no less than two hours to no longer than 24 hours to release an official statement regarding the situation. Although speed is of the essence, don’t be afraid to draft a statement (if you don’t already have one in your management plan) then wait an hour or two to rethink and proofread it. Communication should be quick, but also clear and concise for the duration of the crisis.

Review and Update Your Plan

Updating a crisis management plan

When the crisis subsides and your business can return to a measure of normal operations, take the time to review your response and actions, and update your crisis management plan as necessary. Make note of the things you did well and should repeat in future if a new situation arises, and also study the areas in which you could improve. This will make dealing with future situations easier.

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