The importance of having a crisis management plan

7 Feb

ImageLast semester we had a lecture concerning crisis management, and with all the recent buzz about the Tesco’ horse meat scandal, it got me wondering how companies can try to tackle crisis the best way possible. How do you make sure that a crisis doesn’t get out of hand?

Many companies will experience some kind of crisis that can harm their reputation, however that is why it is important to have a good crisis management strategy. Without a good crisis management strategy, a crisis can damage your brand. Just look at Cadbury’s case from 2006. Cadbury detected Salmonella bacteria in seven of their products. The cause was a broken pipe leak in the production process. What Cadbury did was that they kept these findings a secret for six months, and only after 53 people became sick they recalled the products. The consequences of this crisis were that they received a lot of negative publicity. Their shares dropped and the estimated cost of the contamination was 30 million pounds, They also god a fine for breaking health and safety regulation. All these factors consequently led to the fact that the brand was taken over by Kraft Foods.

Henry Kissinger said that “An issue ignored is a crisis ensured”, and this underpins the importance of being aware of crisis that can occur. This means that companies should take a risk analysis and plan scenarios where crisis can occurs. They should prepare and rehearse a contingency plan so that they know what they should do and act fast if a crisis occurs. Lecturer at the University of Westminster, Michaela O’Brien identifies two points of how companies can prepare themselves for eventual crisis.

1)  Companies should have a clear crisis plan that covers who, what, where, when, why and how

  • Who is at fault?
  • When will they be punished?
  • When did the organization know about the problem?
  • How is it responding?
  • Has it happened before?
  • Could it happen again?

2)  Tools that are ready for when a crisis happen, like for example a web-site (can be a dark site that they can activate if something happens)

It may be difficult to try to plan all different kind of crisis that may occur, but it is good to have a general plan. I think that many crisis could have been less harmful for the company if they had had a good crisis plan.

Sources: Lecture notes, Michaela O’Brien University of Westminster 2012

Image in courtesy of: Northern Lights PR

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