Unit 11 Crisis management Business brief

A crisis may well be an opportunity to test a company's capabilities, but it is an opportunity that most companies would prefer to do without. Some businesses never recover from disasters involving loss of life, such as these:

• PanAm and the Lockerbie bomb: terrorist attack;

• TownsendThoresen and its capsized ferry off Zeebrugge, Belgium;

• Union Carbide and the Bhopal disaster: plant explosion.

Presumably, no amount of crisis management or damage limitation would have saved these organisations.

There are entire industries that live under a permanent cloud of crisis. For example, accidents and incidents around the world, small and large, have discredited the nuclear power industry and given it a permanently negative image. People perceive it as secretive and defensive. Its long-term future is uncertain.

In Britain, the beef industry has been severely damaged by the'mad cow'crisis. This has also had repercussions for some state institutions. In future food crises, people will be less willing to believe the reassurances of the Ministry of Agriculture. The UK government has set up a Food Standards Agency to try and regain credibility in this area, but the crisis has only served to undermine confidence in the overall competence of the state.

Food and drink is a very sensitive issue. The mineral water and soft drinks companies that distribute contaminated products because of mistakes in their bottling plants know this all too well.

Even in disasters where there is no loss of life, the results can be dire, because they are situations that everyone can understand and relate to.

The new cruise ship that breaks down on its maiden voyage, or the liner that leaves on a cruise with workmen still on board because refurbishment is not finished, with passengers Filming the chaos on their video cameras, scenes then shown on television, are public relations nightmares.

All the examples so far relate to the effect of crises on companies' external audiences: customers and potential customers. But businesses are also increasingly being judged on how well they treat their internal audience: their staff in crisis situations. Companies may offer employee assistance programmes to help them through difficult situations or traumatic incidents. For example, bank staff may be offered counselling after a bank robbery. This is part of the wider picture of how companies treat their people in general. A reputation for caring in this area can reduce staff turnover and enhance a company's overall image in society as a whole. This makes commercial sense too: high staff turnover is costly, and an image as a caring employer may have a positive effect on sales.

Arranging a press conference

A press conference is organized similar to a meeting, but questions are asked by reporters and the members of the meeting should answer them. Be ready to difficult questions and those which may not be pleasant to you. You should answer logically, consequently and avoid emotions.

Tasks and exercises:

1. Role play the press conference where the above questions were asked. Students in Group A are government officials and senior managers at Natoil, the state oil company. Students in Group B are journalists from national, local and professional newspapers.

The facts so far. The accident happened last night when a tanker sank in stormy weather. The coastline has been polluted, 10,000 seabirds have been killed and many more are likely to die because of the oil. Cultivation of shellfish may also be affected.

Minister for the Environment. You maintain the line that damage will be limited. The wind direction is about to change, and this should blow the oil away from the coast. You think that the estimate of 10,000 seabirds killed is exaggerated. You do not think there is any danger to shellfish, as they are 200 km away from the site of the spill.

These are the facts as you see them, and you are sticking to them. If the journalists ask any questions not covered by the information above, you use a 'blocking' answer, or ask the Chief Executive of Natoil to answer it.

Chief Executive, Natoil. The shipwrecked tanker did not belong to Natoil: it was subcontracted. You do not see the accident as Natoil's responsibility, but that of the shipping company whose tanker it was. tn any case, you think the long-term damage will be minimal.

These are the facts as you see them, and you are sticking to them. If the journalists ask any questions not covered by the information above, you use a 'blocking' answer, or ask the Minister for the Environment to answer it.

Journalist from 'Petroleum Inquirer'. You ask questions about the general situation, but also particularly about the rumour that the captain of the tanker was drunk at the time of the accident. You want to know what action is being taken to ascertain the complete facts surrounding the accident, and what action the government will take against Natoil and the shipping company.

Journalist from 'Environment Concern’. You ask questions about the general situation, but also particularly about the effect of pollution on the coastline.

Journalist from 'Shellfish Trade Weekly'. You ask questions about the general situation, but also particularly about compensation for fishermen if their fishing grounds are destroyed by oil.