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back to index backASIAtalk April,  2005

Managing organizational crises ... globally

When faced with extraordinary conditions, how well can your organization make timely decisions? In crisis, how confident are you that actions taken by your stakeholders around the globe will be based on best facts and clear thinking? Thunderbird Professor Christine Pearson,  international expert on organizational crisis management, explains how to meet the challenge of global crises.

When an organizational crisis hits, we know that a key to effective outcomes is balancing timeliness against certainty. Organizational crisis management is a systemic approach to this challenge.

An organizational crisis is an event or trend that has the potential to jeopardize the viability of an organization. Typical examples include product tampering, environmental contamination, hostile takeovers, workplace violence, strikes, activist attacks, and leadership scandals. Today, some organizations operating in the global arena also prepare for additional, more exotic crises, whether rooted in terrorism, regional instability, religious extremism, or information warfare.

Two decades of research demonstrates that crisis management preparations yield organizational benefits including early detection of warning signals, preemptive spotting of failures, continuous organizational learning and agile decision-making. In the best-prepared settings, representative members engage in on-going preparations. They discuss how specific crises could affect their organization; they plan for contingencies that these crises would impose; and they align resources for containment. Through crisis management efforts, leaders and followers learn how to make decisions and take actions when pressed by time, uncertainty, and incomplete information.

Crisis management is challenging for all organizations, but those operating in a global context face additional complexities. The reach of globalization can make it more difficult to prepare for crises when responses must be stretched across lands and time zones. Differences among stakeholders can intensify a global organization's vulnerability if cultural differences cause unpredicted responses and other problematic permutations. Whether through broad-reaching markets, widely dispersed suppliers, or worldwide recognition, any weaknesses among business components can exacerbate vulnerability. Even crises that threaten the most remote links can jeopardize an organization.

No leaders can prepare their organizations for every bizarre event that might happen, nor should they. But the best-prepared organizations support an open and transparent approach in anticipating, preparing for, and responding to crises. Rudimentary guidelines for effective crisis management transcend industrial and geographic bounds: do the right thing (because you can't talk yourself out of something you have behaved yourself into); never lie (because the only thing worse than being caught in a crisis is being caught lying about a crisis); tell the truth and tell it quickly (because the current speed of access and transmission limits your organization's control over information to just a few hours, at most); welcome signals of potential problems by supporting messengers of bad news (because the most efficient way to manage a crisis is to forestall it); and, once a crisis has passed, do all that you can to extract every possible lesson (because you just might avoid future crises by doing so).

But, what must savvy leaders of global organizations do additionally? Just as effective global leaders understand the importance of learning, valuing and adapting diverse attitudes and behaviors across borders, so an adaptive mindset is a fundamental starting point for implementing crisis management globally. The following recommendations target global challenges.

1. Make the importance of crisis management highly visible across borders. Practice crisis management consistently by emphasizing the importance of crisis preparations across cultures, holding leaders and employees accountable, regardless of their locations.

2. Demonstrate crisis management values in the organization's actions, regardless of the setting. The greatest benefit of doing the right thing consistently is that those actions will guide appropriate organizational behavior when the specifics of a looming crisis have not been foreseen.

3. Facilitate cross-cultural representation. Crisis management training and crisis management team membership should include global representation that mirrors cultural values held in your organization. When actual crises or near-misses occur, associate practices and outcomes should be communicated clearly and honestly to improve preparations cross-culturally.

4. Build stakeholder bonds across borders. Building strong bonds across borders in advance of any crisis facilitates ad hoc access to resources and greater predictability among stakeholders when a crisis occurs.

5. Manage and translate information carefully. Broad, multimedia approaches increase transparency across borders; simple, consistent messages around the world enhance clarity.

The objective of organizational crisis management is to avert crises, or to mitigate those that do occur. To achieve this in a global organization, diverse perspectives must be addressed as global relationships are forged. Although global reach intensifies the challenges and complexities along the way, a crisis management approach that is institutionalized globally can tap richly varied resources for contemplating, preparing for and resolving crises.

Source: Global Vista newsletter (April '05 issue) from Thunderbird Executive Education - GAI

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Crawl, Walk and Run—The Move Offshore
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The changing face of Japanese corporate governance - a farewell to tradition
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