Natural crises, typically natural disasters considered as acts of God, are such environmental phenomena as earthquakes, volcanic eruptions, tornadoes and hurricanes, floods, landslides, tsunamis, storms, and droughts that threaten life, property, and the environment itself.
Example: 2004 Indian Ocean earthquake (Tsunami)
Technological crises
Technological crises are caused by human application of science and technology. Technological accidents inevitably occur when technology becomes complex and coupled and something goes wrong in the system as a whole (Technological breakdowns). Some technological crises occur when human error causes disruptions (Human breakdowns). People tend to assign blame for a technological disaster because technology is subject to human manipulation whereas they do not hold anyone responsible for natural disaster. When an accident creates significant environmental damage, the crisis is categorized as mega damage. Samples include software failures, industrial accidents, and oil spills.
Examples: Chernobyl disaster, Exxon Valdez oil spill
Confrontation crises
Confrontation crises occur when discontented individuals and/or groups fight businesses, government, and various interest groups to win acceptance of their demands and expectations. The common type of confrontation crises is boycotts, and other types are picketing, sit-ins, ultimatums to those in authority, blockade or occupation of buildings, and resisting or disobeying police.
Example: Rainbow/PUSH’s (People United to Serve Humanity) boycott of Nike
Crises of malevolence
An organization faces a crisis of malevolence when opponents or miscreant individuals use criminal means or other extreme tactics for the purpose of expressing hostility or anger toward, or seeking gain from, a company, country, or economic system, perhaps with the aim of destabilizing or destroying it. Sample crises include product tampering, kidnapping, malicious rumors, terrorism, and espionage. Example: 1982 Chicago Tylenol murders
Crises of organizational misdeeds
Crises occur when management takes actions it knows will harm or place stakeholders at risk for harm without adequate precautions.
Lerbinger specified three different types of crises of organizational misdeeds: crises of skewed management values, crises of deception, and crises of management misconduct.
Crises of skewed management values
Crises of skewed management values are caused when managers favor short-term economic gain and neglect broader social values and stakeholders other than investors. This state of lopsided values is rooted in the classical business creed that focuses on the interests of stockholders and tends to disregard the interests of its other stakeholders such as customers, employees, and the community.
Example: Sears sacrifices customer trust
Crises of deception
Crises of deception occur when management conceals or misrepresents information about itself and its products in its dealing with consumers and others.
Example: Dow Corning’s silicone-gel breast implant
Crises of management misconduct
Some crises are caused not only by skewed values and deception but deliberate amorality and illegality.
Workplace violence
Crises occur when an employee or former employee commits violence against other employees on organizational grounds.
Example: DuPont’s Lycra
Rumors
False information about an organization or its products creates crises hurting the organization’s reputation. Sample is linking the organization to radical groups or stories that their products are contaminated.
Example: Procter & Gamble’s Logo controversy
Government and crisis management
Historically, government at all levels – local, state, and national – has played a large role in crisis management. Indeed, many political philosophers have considered this to be one of the primary roles of government. Emergency services, such as fire and police departments at the local level, and the United States National Guard at the federal level, often play integral roles in crisis situations.
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To help coordinate communication during the response phase of a crisis, the U.S. Federal Emergency Management Agency (FEMA) within the Department of Homeland Security administers the National Response Plan (NRP). This plan is intended to integrate public and private response by providing a common language and outlining a chain-of-command when multiple parties are mobilized. It is based on the premise that incidences should be handled at the lowest organizational level possible. The NRP recognizes the private sector as a key partner in domestic incident management, particularly in the area of critical infrastructure protection and restoration.
The NRP is a companion to the National Incidence Management System that acts as a more general template for incident management regardless of cause, size, or complexity.
FEMA offers free web-based training on the National Response Plan through the Emergency Management Institute.
Common Alerting Protocol (CAP) is a relatively recent mechanism that facilitates crisis communication across different mediums and systems. CAP helps create a consistent emergency alert format to reach geographically and linguistically diverse audiences through both audio and visual mediums.
Elected officials and crisis management
Historically, politics and crisis go hand-in-hand. In describing crisis, President Abraham Lincoln said, “We live in the midst of alarms, anxiety beclouds the future; we expect some new disaster with each newspaper we read.”
Crisis management has become a defining feature of contemporary governance. In times of crisis, communities and members of organizations expect their public leaders to minimize the impact of the crisis at hand, while critics and bureaucratic competitors try to seize the moment to blame incumbent rulers and their policies. In this extreme environment, policy makers must somehow establish a sense of normality, and foster collective learning from the crisis experience.
In the face of crisis, leaders must deal with the strategic challenges they face, the political risks and opportunities they encounter, the errors they make, the pitfalls they need to avoid, and the paths away from crisis they may pursue. The necessity for management is even more significant with the advent of a 24-hour news cycle and an increasingly internet-savvy audience with ever-changing technology at its fingertips.
Public leaders have a special responsibility to help safeguard society from the adverse consequences of crisis. Experts in crisis management note that leaders who take this responsibility seriously would have to concern themselves with all crisis phases: the incubation stage, the onset, and the aftermath.
Crisis leadership then involves five critical tasks: sense making, decision making, meaning making, terminating, and learning.
A brief description of the five facets of crisis leadership includes:
Sense making may be considered as the classical situation assessment step in decision making.
2. Decision making is both the act of coming to a decision as the implementation of that decision.
3. Meaning making refers to crisis management as political communication.
4. Terminating a crisis is only possible if the public leader correctly handles the accountability question.
5. Learning, refers to the actual learning from a crisis is limited. The authors note, a crisis often opens a window of opportunity for reform for better or for worse.
Models and theories associated with crisis management
Crisis Management Model
Successfully defusing a crisis requires an understanding of how to handle a crisis – before they occur. Gonzalez- Herrero and Pratt found the different phases of Crisis Management.
There are 3 phases in any Crisis Management are as below
1. The diagnosis of the impending trouble or the danger signals.
2. Choosing appropriate Turnaround Strategy.
3. Implementation of the change process and its monitoring.
Management Crisis Planning
No corporation looks forward to facing a situation that causes a significant disruption to their business, especially one that stimulates extensive media coverage. Public scrutiny can result in a negative financial, political, legal and government impact. Crisis management planning deals with providing the best response to a crisis.
Contingency planning
Preparing contingency plans in advance, as part of a crisis management plan, is the first step to ensuring an organization is appropriately prepared for a crisis. Crisis management teams can rehearse a crisis plan by developing a simulated scenario to use as a drill. The plan should clearly stipulate that the only people to speak publicly about the crisis are the designated persons, such as the company spokesperson or crisis team members. The first hours after a crisis breaks are the most crucial, so working with speed and efficiency is important, and the plan should indicate how quickly each function should be performed. When preparing to offer a statement externally as well as internally, information should be accurate. Providing incorrect or manipulated information has a tendency to backfire and will greatly exacerbate the situation. The contingency plan should contain information and guidance that will help decision makers to consider not only the short-term consequences, but the long-term effects of every decision.
Business continuity planning
When a crisis will undoubtedly cause a significant disruption to an organization, a business continuity plan can help minimize the disruption. First, one must identify the critical functions and processes that are necessary to keep the organization running. Then each critical function and or/ process must have its own contingency plan in the event that one of the functions/processes ceases or fails.
Testing these contingency plans by rehearsing the required actions in a simulation will allow for all involved to become more sensitive and aware of the possibility of a crisis. As a result, in the event of an actual crisis, the team members will act more quickly and effectively.
Structural-functional systems theory
Providing information to an organization in a time of crisis is critical to effective crisis management. Structural-functional systems theory addresses the intricacies of information networks and levels of command making up organizational communication. The structural-functional theory identifies information flow in organizations as “networks” made up of members and “links”. Information in organizations flow in patterns called networks.
Diffusion of innovation theory
Another theory that can be applied to the sharing of information is Diffusion of Innovation Theory. Developed by Everett Rogers, the theory describes how innovation is disseminated and communicated through certain channels over a period of time. Diffusion of innovation in communication occurs when an individual communicates a new idea to one or several others. At its most elementary form, the process involves: (1) an innovation, (2) an individual or other unit of adoption that has knowledge of or experience with using the innovation, (3) another individual or other unit that does not yet have knowledge of the innovation, and (4) a communication channel connecting the two units. A communication channel is the means by which messages get from one individual to another.
Unequal human capital theory
James postulates that organizational crisis can result from discrimination lawsuits. James’s theory of unequal human capital and social position derives from economic theories of human and social capital concluding that minority employees receive fewer organizational rewards than those with access to executive management. In a recent study of managers in a Fortune 500 company, race was found to be a predictor of promotion opportunity or lack thereof. Thus, discrimination lawsuits can invite negative stakeholder reaction, damage the company’s reputation, and threaten corporate survival.
Social media and crisis management
Social media has accelerated the speed that information about a crisis can spread. The viral affect of social networks such as Twitter means that stakeholders can break news faster than traditional media – making managing a crisis harder. This can be mitigated by having the right training and policy in place as well as the right social media monitoring tools to detect signs of a crisis breaking.
Social media also gives crisis management teams access to real-time information about how a crisis is impacting stakeholder sentiment and the issues that are of most concern to them.
Public Distribution System (PDS)
The Public Distribution System (PDS) in India is an important public intervention for enhancing food security. The PDS provides subsidised food grains (and other essential commodities) through a network of ‘fair price shops’. Until 1992 access to the PDS was, at least in theory if not in practice, universal. Corruption and high operational costs were among the reasons that were used to justify the move to the Revamped Public Distribution System (based on a principle of geographic targeting)
in tribal, arid, hill and remote areas in 1992 and then to a Targeted Public Distribution System (TPDS) in 1997. Under the TPDS, households were classi¬ed as Above Poverty Line (APL) or Below Poverty Line (BPL), based on the economic status of households. BPL households continued to receive subsidised food grains through the TPDS whereas subsidies for APL households have been gradually phased out.
The impact of these changes can be evaluated on several criteria including selection into or exclusion from the TPDS, utilisation of PDS quotas, e¬€ect on the consumption patterns and so on. Correct identi¬cation could mean that the programme may have improved in terms of better targeted subsidies. Access to cheap food grain could make a more diversi¬ed and nutritious diet a¬€ordable for poor households. Much depends, however, on the actual functioning of the PDS on the ground.
Those with BPL cards made repeated trips to ration shop that were often quite far and queued in order to enjoy this small subsidy. In spite o this, they rarely got their full entitlement of 35kg. Having spent some time at ratio shops, I noticed that they were often cheated by their PDS dealer. Those who were aware of being cheated often complained to me, but did not protest in front of the PDS dealer.
I find that though BPL cards have generally been given to the poorer households in the sample, utilisation is low. Among those who have access to the TPDS, one-third of the sample households do not utilise their quota at all and another half do not utilise their quota fully. Further, many of these households purchase the same items from the market at higher prices.
This puzzle of ‘under-purchase’ (purchasing less than one’s entitlement and yet purchasing from the market at a higher price) from the PDS is examined using a ‘dual pricing’ model.
The dual-pricing model provides a framework within which government intervention in the wheat market and its associated problems can be analysed.
However, in order to account for under-purchase from the PDS and related patterns, the standard dual-pricing model needs to be extended to take into account additional factors such as transaction costs, uncertainty, and quality variations.
There could be various reasons for low utilisation levels. Demand-side bottlenecks include cash-¬‚ow problems (that is, households may not have cash when foodgrain is available in government ration shops), inappropriate foodgrains being supplied through the PDS, and so on. There are also supply-side constraints in the form of diversion to the open market or just irregular functioning of ration shops.
The article also examines the impact of the PDS on consumption patterns. While the PDS does not have much impact on the level of cereal consumption, it seems to a¬€ect the composition of cereal consumption. Speci¬cally, the TPDS tilts cereal consumption of households towards wheat , away from coarse cereals. This is possibly a matter of concern, since coarse cereals are generally more nutritious than wheat.
Problems which headed in PDS & Free Amenities & Free Supplies:
Many family card or ration card holders don’t go to the Fair Price Shops to get the goods or benefits which is eligible to them.
As a result rice, wheat, sugar, kerosene or any other form of PDS which needs to be settled or handed over to the real beneficiary is not properly distributed. Still there are issues of hoarding and creation of black markets. The one who deserves is deprived of the benefits.
The Govt.’s prime motive is to eradicate death which occurs due to starvation and poverty. As a result it was decided to introduce subsidized PDS goods and free PDS goods.
Later on this PDS was taken as a political strategy by politicians for their success in elections
As a result of providing free amenities and free PDS people become lazy.
They don’t go for any form of employment especially, marginalized sections of the people.
In the case of a SSI or Tiny sector which is labour intensive in nature face the heat or crisis in the form of short supply of labour.
The amount which is being spent from the State’s Treasury for PDS & Free Amenities results in price rise for other articles, goods and services in the form of taxation and setting off the amount which has been infused / spended in the PDS & Free Amenities.
Due to short supply of labour and due to power crisis which is now seen in many parts of India the GDP with regard to manufacturing sector has declined.
At present due to failure of monsoon and uneven monsoon rains the kharif crops are destroyed.
This has resulted in a heavy loss to the farmers and this lead to reduced supply of food grains and increased prices in the market.
Now this particular free PDS cannot apply due to short supply of grains.
Now the people who are unemployed or underemployed face the crisis as they have enjoyed free benefits throughout these years.
They don’t have the mindset to go in search for any other alternative employment opportunities.
These free amenities made people more greedy
Suggestions to solve the crisis which was created due to free PDS & free amenities:
The BPL(Below Poverty Line) should be provided with these benefits.
Proper survey and field work should be conducted to know the population which is in the BPL.
It is better to reduce the issue of PDS to APL (Above Poverty Line) and at a later stage it is advisable to eradicate this PDS to APL as they prove to be self sufficient with their earnings.
Free PDS & other amenities should be provided to the marginalized sections of the society based on a condition that atleast one person either male / female in a family should make themselves employed in any organized or unorganized sector.
Awareness camps on health, stress management and necessity of being employed should be given.
If the above said measures were put into effect then the scarce supply of labour can be reduced.
Crisis of Malevolence:
Organizations face crisis of malevolence when some notorious employees take the help of criminal activities and extreme steps to fulfill their demands.
Acts like kidnapping company’s officials, false rumours all lead to crisis of malevolence.
Malevolence
Employees who behave illegally or unethically act with malevolence. Intentional harm to an individual or company is malevolence. This type of crises includes security breaches, product tampering, sabotage, extortion, lawsuits and employee scandals. Malevolence outside of an organization may include kidnapping, assault or spreading rumors.
Malevolence may refer to:
Evil
Hostility
Malice (law)
Sadism
Security breach
An act from outside an organization that bypasses or contravenes security policies, practices, or procedures. A similar internal act is called security violation.
Broadly speaking, a security breach is a violation of any policy or law that is designed to secure something. When people or vehicles bypass screening checkpoints, or enter secure buildings without presenting the appropriate credentials, security breaches are generally obvious. Less obvious are security breaches that involve data or information. In a data context, a security breach is any activity that compromises the confidential nature of certain information.
Most of the time, what is or is not a security breach is defined by law. Statutes in many countries set out security measures for any number of things, from border crossings to data sharing and electronic commerce transactions. A breach is usually defined as any action, intentional or otherwise, that weakens a certain defined security interest.
The best-known security breaches typically cause some noticeable harm. An airport security breach that allows a passenger to board a plane with a weapon, or a data loss that leads to identity theft are clear examples. Under most security breach laws, however, harm is not always a requirement. The threat of harm, or likelihood of harm, is usually enough.
Product Tampering, the unauthorized altering of a consumer product without the knowledge of the product’s owner or eventual user, is almost always treated as a threat to human health or safety, because it typically changes the contents of ingested products, such as foods or drugs, in a harmful manner. An exception to this pattern is fraudulently decreasing the odometer settings on used automobiles in an effort to increase the apparent value of a vehicle to a prospective buyer. Product tampering began in the 1890s. An especially bad case was the cyanide poisoning of Bromo Seltzer containers. The worst case of product tampering in America in the twentieth century happened in Chicago in 1982, when poison placed in packages of Tylenol killed seven people. Congress responded with the Federal Anti-Tampering Act of 1983, making it a crime to tamper with products or to make false claims of tampering. Tampering motives have included revenge, financial gain, and publicity for various causes. Tampering incidents have triggered false reports and copycat cases, both of which occurred in 1993 in response to a fabricated story that syringes were found in Pepsi-Cola cans. To combat tampering, manufacturers use science and technology to generate “tamper-evident” packaging and DNA testing to identify suspected tamperers.
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Sabotage is a form of subversion which involves deliberate damage, interference, or disruption. In a classic example, ecological activists have disabled the engines of logging equipment in the Pacific Northwest to prevent loggers from working at various points in history. There are a number of different forms of sabotage, all of which are designed to obstruct an activity in some way, creating chaos and often generating economic problems as people struggle to resolve the damage.
Many people are not familiar with the true origins of this word, although they may be acquainted with the folk etymology, which claims that the term is derived from the practice of throwing wooden shoes known as sabots into the workings of machines. Though a charming idea, this is not, in fact correct. “Sabotage” actually comes from the French word saboter, which means “to walk clumsily,” a reference to the self-same sabots discussed above; the term is actually meant to describe the work stoppage and disruption created by sabotage.
One of the most infamous forms is military sabotage, in which saboteurs penetrate the defenses of an enemy and attempt to disrupt weapons systems, military strategy, and so forth. Sometimes, damage comes from within, with rebels sabotaging the military of their own nations in an attempt to help the enemy gain the upper hand. It can also take a political form, in which case it is primarily carried out through well-timed media releases and comments which are designed to undermine opposing political campaigns.
Extortion is a crime that involves the illegal acquisition of money, property, or favors through the use of force, or the threat of force. Historically, the term was defined as an abuse of privilege on the part of a public official who used his or her position to get money or favors, but today, people at all levels of society could potentially commit extortion. Penalties vary, depending on the specifics of the crime. In some countries, it is treated especially seriously because it is linked with organized crime, and sometimes special laws are designed to make it easier to prosecute and punish extortion.
To the casual ear, extortion can sound very similar to blackmail, in which people use a threat to demand payments or favors, and robbery, in which a criminal takes something by force. However, extortion is slightly different from both of these crimes. In blackmail, someone threatens to do something which is entirely legal, such as publishing a set of photographs, with the blackmailee offering payment to avoid exposure and humiliation. Extortion is entirely illegal, as it involves threats of violence or other illegal acts.
A lawsuit or (very rarely) “suit in law” is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant’s actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff’s complaint. If the plaintiff is successful, judgment is in the plaintiff’s favor, and a variety of court orders may be issued to enforce a right, award damages, or impose a temporary or permanent injunction to prevent an act or compel an act. A declaratory judgment may be issued to prevent future legal disputes. Although not as common, lawsuit may also refer to a criminal action, criminal proceeding, or criminal claim.
A lawsuit may involve dispute resolution of private law issues between individuals, business entities or non-profit organizations. A lawsuit may also enable the state to be treated as if it were a private party in a civil case, as plaintiff, or defendant regarding an injury, or may provide the state with a civil cause of action to enforce certain laws.
The conduct of a lawsuit is called litigation. One who has a tendency to litigate rather than seek non-judicial remedies is called litigious.The plaintiffs and defendants are called litigants and the attorneys representing them are called litigators.
When Good Employees Do Bad: Seven Behaviors that May Precede a Scandal
by David Gebler
Good intentions can lead to bad outcomes in business. This is especially true in organizations that have toxic cultures in which leaders tout worthy values–and then put up roadblocks that prevent employees from living those values.
The GSA scandal provides an apt example. With all the rampant spending at the GSA, one has to ask if employees were afraid to speak up, lest they upset their coworkers. Or perhaps they had become complacent in an upbeat, backslapping culture that rewarded everyone early, often,
and extravagantly. Time will tell. In the case of the GSA, the good intention of employees–to be a solid team player–led to a very bad result. But it’s poor leadership that created that toxic culture and allowed it to drag good employees down.
Gebler says desirable behaviors such as being team players (as in the case of the GSA), or even meeting deadlines, being goal-oriented, and staying on budget can get distorted and become destructive in a company driven by weak leadership values and a weak culture. That’s because leadership values drive success, not employee behaviors.
When we look at companies that have faced scandals such as recalls, ethical violations, or crimes, the problem often comes down to employees whose surprisingly positive behavior was distorted by a toxic culture and clueless leaders. Here are seven seemingly benign behaviors that may come back to bite a company if they become exaggerated and throw the organization out of alignment:
Blind loyalty to the team. Loyalty is a good thing, right? Not when it creates a culture of “I know this is bad, but it’s not my decision.” The unethical spending at the GSA was a symptom of leadership without values. Employees were rewarded with lavish perks provided by managers who had their own interests at heart. This created a culture in which employees received the greatest benefit by staying loyal to their coworkers and generous bosses, rather than questioning their actions.
Commitment to meeting deadlines. One would think that a company where employees are encouraged to meet deadlines and rewarded for doing so consistently would lead to super-productivity and efficiency. In fact, it can lead to disaster. At Johnson & Johnson, the understood directive to get product to market on tough deadlines created a culture of “Don’t ask too many questions” and resulted in a series of dangerous drug recalls that badly sullied the company’s reputation.
Excessive optimism. When a person is sick, optimism can buoy his spirits and help healing. When a company is unhealthy, “Everything is going to be okay” is not what you need to hear from those in authority positions. Take David Myers, former controller of WorldCom. By his own
account, he saw the problems of the now-defunct company through rose-colored glasses. He simply kept believing-and telling his frightened staff-that the problems would resolve themselves eventually. By the time he came to his senses, he was under arrest for accounting fraud.
Staying focused on a goal. Telling employees to keep their eye on the prize is not intrinsically
a bad thing. But when the goal becomes more important to management than the underlying values of the organization, it can lead to a dysfunctional culture. For example, in the 1990s, Sears gave its auto repair mechanics a mandatory sales goal of $147 per hour. It wasn’t long before customers began to be overcharged or sold unnecessary repairs.
Having a competitive mindset. Boeing is known for its highly competitive employees and work culture. That’s a good thing, right? Not so in 1996, when the company lost billions in government contracts for ethics violations after an employee stole 25,000 pages of proprietary documents from Lockheed. Flash forward to 2005, when employees were still so competitive that their own work teams were known to keep useful information secret from other teams in the company to make sure they stayed on top. Too much competition can erode cultural values, leading to disaster.
Sticking to a budget. Most managers would be thrilled if their employees were doggedly determined to stay on budget and not cost the company any unnecessary money. But a good intention can go bad when financial performance becomes the only metric that matters. That was the case, many believe, behind the fatal mistake made on the BP oil platform in the Gulf. Before the explosion in April 2012 caused by a safety shortcut, BP’s Macondo project was more than $40 million over budget. You know the rest.
Wanting to please higher
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