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Issues Management and Crisis Management

Business and Society: Ethics and Stakeholder Management, 7e • Carroll & BuchholtzCopyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

Prepared by Deborah BakerTexas Christian University

Chapter 6

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1. Distinguish between the conventional and strategic approaches to issues management.

2. Identify and briefly explain the stages in the issues management process.

3. Describe the major components in the issues development process and factors in actual practice.

4. Define a crisis and identify the four crisis stages.

5. List and discuss the major stages or steps involved in managing business crises.

Chapter 6 Learning Outcomes

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Chapter 6 Outline

Issues Management Crisis Management Summary Key Terms Discussion Questions

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Introduction to Chapter 6

This chapter focuses on issue and crisis management, and the planning processes required to improve stakeholder management and to respond to stakeholder expectations.

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Issues Management

Conventional Approach

Strategic Management Approach

Narrow Focus

Broad Focus

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Issues Management

Conventional Approach

Issues fall within the domain of public policy or public affairs management.

Issues typically have a public policy / public affairs orientation or flavor. An issue is any trend, event, controversy, or public development that

might affect the corporation. Issues originate in social / political / regulatory /

judicial environments.

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Issues Management

Strategic Management Approach

Issues management is typically the responsibility of senior line management or strategic management staff.

Issues identification is more important than it is in the conventional approach.

Issues management is seen as an approach to the anticipation and management of external / internal challenges to the company strategies, plans, and assumptions.

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Strategic Issue Management

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Figure 6-2

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Issues Definition

IssueA matter that is in dispute between parties. The dispute evokes debate, controversy, or differences of opinion.

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Issues Definition

Characteristics of an Emerging Issue

Terms of the debate are not clearly defined Issue deals with matters of conflicting values

and interest Automatic resolution is not available Issue is often stated in value-laden terms Trade-offs are inherent

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Basic Assumptions

Issues Management Process

Issues can be identified earlier, more completely, and more reliably

Early anticipation widens the range of options Early anticipation permits study and understanding of the

full range of issues Early anticipation permits organization to develop a positive

orientation towards the issues Organization will have earlier identification of the

stakeholders Organization will be able to supply information to influential

publics earlier and more positively, creating better understanding

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Model of Issues Management Process

Identification of IssuesIdentification of Issues

Analysis of IssuesAnalysis of Issues

Prioritization of IssuesPrioritization of Issues

Formulation of Issue ResponsesFormulation of Issue Responses

Implementation of Issue ResponsesImplementation of Issue Responses

Evaluation, Monitoring, and Control of ResultsEvaluation, Monitoring, and Control of Results

Figure 6-3

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Identification of Issues

Scan the environmentScan the environment

Identify emerging issues and trendsIdentify emerging issues and trends

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Identification of Issues

Leading Forces as Predictors of Social Change

Leading events Leading authorities / advocates Leading literature Leading organizations Leading political jurisdictions

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Identification of Issues

Figure 6-4

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Issues Selling and Buying

IssuesSelling

Relates to middle managers exertingupward influence in organizations asthey try to attract the attention of topmanagers.

IssuesBuying

Top managers adopt a more open mind-set for the issues that matter totheir subordinates.

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• WhoWho (which stakeholders) is affected by the issue?

• WhoWho has an interest in the issue?

• WhoWho is in a position to exert influence?

• WhoWho has expressed opinions on the issue?

• WhoWho ought to care about the issue?

• WhoWho started the ball rolling? (Historical view)

• WhoWho is now involved? (Contemporary view)

• WhoWho will get involved? (Future view)

Analysis of Issues

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Ranking of Issues

Xerox Approach

High priority

Nice to know

Questionable

PPG Approach

Priority A

Priority B

Priority C

Probability-Impact Matrix

HighMediumLowH

igh

Med

ium

Lo

w

Probability of Occurrence

Imp

act

on

Co

mp

any

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Filtering and Ranking of Issues

Figure 6-5

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Five Filter Criteria

1. Strategy

2. Relevance

3. Actionability

4. Criticality

5. Urgency

Ranking of Issues

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Other Issues-Ranking Techniques

Polls / SurveysPolls / Surveys

Expert panelsExpert panels

Content analysisContent analysis

Delphi TechniqueDelphi Technique

Trend extrapolationTrend extrapolation

Scenario buildingScenario building

Use of precursor events or bellwethersUse of precursor events or bellwethers

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Formulation and Implementation of Responses

Formulation The response design process

Implementation The action design process

Plan clarity Resources needed Top management support Organizational structure Technical competence Timing

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Issues Development Process

Issues Development

Process

The growth process or life cycleof an issue

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Issue Development Life Cycle Process

Figure 6-6

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Issues Management in Practice

Companies that adopt issues management processes …

develop better overall reputations

develop better issue-specific reputations

perform better financially

Provides a bridge to crisis management

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Crisis Management

To manage a crisis one first must understand that crises:

Occur abruptly

Cannot always be anticipated or forecast

May not occur within an issue category

http://www.crisisexperts.com@

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Crisis Management

Basic Causes of a Business Crisis

1. Acts of God

2. Mechanical problems

3. Human errors

4. Management decisions / indecisions

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The Nature of Crises

Crisis Definitions

A major, unpredictable event that has potentially negative results and its aftermath may significantly damage an organization and its employees, products, services, financial condition, and reputation.

A low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly.

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Crisis Management

How a Crisis Should NOT be Handled

Minimizing the issue

Stonewalling

Too little, too late

From Figure 6-7

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Types of Crises

EconomicEconomic

PersonnelPersonnel

PhysicalPhysical

CriminalCriminal

InformationInformation

ReputationalReputational

Natural disastersNatural disasters

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Types of Crises

Outcomes of Major Crises

Escalated in intensity

Subjected to media and government scrutiny

Interfered with normal business operations

Damaged the companies bottom line

Resulted in major power shifts

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Crisis Management: Four Stages

Prodromal Crisis StageWarning—precursorSymptom —precrisis

Prodromal Crisis StageWarning—precursorSymptom —precrisis

Acute Crisis StagePoint of no return

Crisis has occurred

Acute Crisis StagePoint of no return

Crisis has occurred

Crisis Resolution StagePatient is well/whole again

Crisis Resolution StagePatient is well/whole again

Chronic Crisis StageLingering on—perhaps

indefinitely; period of self-doubt; self-analysis

Chronic Crisis StageLingering on—perhaps

indefinitely; period of self-doubt; self-analysis

Learning

Figure 6-8

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Pattern of a Poorly-Managed Crisis

Early indications that trouble is brewing occur.

Warnings are ignored / played down.

Warnings build to a climax.

Pressure mounts.

Executives are often overwhelmed or can’t cope.

Quick-fix alternatives look appealing. Hasty moves create trouble.

Clamming-up versus opening-up options present themselves.

Most firms choose the former.

A siege mentality prevails.

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Managing Business Crises

Fink’s Three-Stage Model

1. Identifying the crisis

2. Isolating the crisis

3. Managing the crisis

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BusinessWeek’s Five Steps in Managing Crises

1. Identify areas of vulnerability

2. Develop a plan for dealing with threats

3. Form crisis teams

4. Simulate crisis drills

5. Learn from experience

Managing Business Crises

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Monsanto’s 10R’s for Handling Public Policy Crises

Respond early Recruit a credible spokesperson Reply truthfully Respect the opposition’s concerns Revisit the issue with follow-up Retreat early if it’s a loser Redouble efforts early if it’s a critical company issue Reply with visible top management Refuse to press for what is not good public policy Repeat the prior statement regularly

Managing Business Crises

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Managing Business Crises

Augustine’s Six Stages of Crisis Management

1. Avoiding the crisis

2. Preparing to manage the crisis

3. Recognizing the crisis

4. Containing the crisis

5. Resolving the crisis

6. Profiting from the crisis

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1. Identify crisis communication team

2. Identify key spokespersons

3. Train your spokespersons

4. Establish communications protocols

5. Identify and know the audience

6. Anticipate crises

7. Assess the crisis situation

8. Identify key messages to communicate

9. Decide on communication methods

10. Be prepared to ride out the storm

Crisis Communications

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Components of Crisis Plans

Media communications 99%

Employee communications 98%

Crisis management team 94%

Communications with elected officials 86%

CEO / senior executive involvement 82%

Documentation / written policy / handbook 81%

Website communications 77%

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Be First, Be Right, Be Credible

Be FirstBe First

Be CredibleBe Credible

Be RightBe Right

Get message out first to controlcontent and accuracy

Get message out first to controlcontent and accuracy

Be open, honest, and speak withone consistent voice

Be open, honest, and speak withone consistent voice

Say and do the right thingSay and do the right thing

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Benefits of Crisis Management

Fewer disruptions to every life for consumers, employees, and citizens

Preparing for one type of crisis may be beneficial when other types of crises strike

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Issues management Crisis management Portfolio approach Issue Emerging issue Issues selling Issues buying Probability-impact matrix Issues development

process Crisis

Prodromal crisis stage Acute crisis stage Chronic crisis stage Crisis resolution stage Crisis teams Crisis communications Ten steps of crisis

communication Being first Being right Being credible

Key Terms