A company can prepare for a crisis by applying three simple steps as stated by Tench and Yeomans, 2009. The first one is the crisis audit, the second is the crisis manual and the third one is the crisis simulation and training. Further investigation will be carried out on each one of them.
Focus will be placed now on the crisis audit. This is similar to the SWOT analysis, however the only difference is that it contains two out of the four factors: it defines the weaknesses and the strengths of a certain company or organisation. In this situation the crisis audit investigate the most crucial arias such as operations, marketing, employee relations, safety experts, environmental experts, governmental professionals, government, legal and communication people. (Tench and Yeomans, 2009). The audit will put hard questions in order to find out what is the most likely situation in which to appear a crisis; will determine how well the organisation is prepared to react in such a situation and will find out if all the needed resources are available.
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Once this stage is complete then the results could be used to determine the weakest places and which investors in the company will be most affected by such a crisis. Then people can be trained with the needed techniques in order to react in the most effective and efficient way.
Another possibility in order to prepare a company for a possible breakdown is to use the crisis manual. Normally it contains a simple system of no more than ten pages of manual of rapid communications, basic messages and audience identification (Tench and Yeomans, 2009). This crisis manual could be used as an example of the basic tasks. Such tasks will be for example to activate the crisis team and facilities, thus allowing the crisis team to focus on more crucial problems and minimizing the possible damages.
The third possibility is to use the crisis simulation and training. This action is invented in order to create a real situation of a breakdown. It can be used as an individual or group training and it aims to examine the employee`s skills and thus finding weak spots. When crisis simulation is applied usually it is used several times in order to clear any possible weaknesses in people`s skills.
Another useful method that a company can use is to integrate debriefing sessions in the communication plans in order to make sure that the team understands the ongoing issues. They should also be aware of the importance of community and employee relations. (Tench and Yeomans, 2009)
A company should apply those rules in the appropriate manner. This can minimise possible damages and facilitate the process of handling with proficiency situations of a breakdown.
What is the role, and how important is the role, of the 'leader' in a crisis situation?
The role of the leader is crucial. A good leader has to be an effective communicator in order to bring confidence, sustain credibility and generate excitement (Davis, 2007). A leader has a lot of tasks to accomplish through communication, but the main ones are: to create trust in management`s competencies and decision making skills; to delineate credible and inspiring vision for the future and to demonstrate an ability to anticipate, initiate and implement changes (Davis, 2007)
In an organisation these objectives are created in order to motivate and empower. From outside they show the nature of the company as well as creating its corporate image.
According to Bennis and Nanus, the effectiveness of the leadership is related to the traits of logical thinking, persistence, empowerment and self-control. (Brooks, 2006) Logical thinking refers to the ability to present ideas in simple and understandable forms; the ability to persuade the subordinates and to explain in a unique way. The more this traits are applied, the better the understanding of the organisational goal. Next to be discussed are the persistence traits. This focuses on the involvement of the leader in the performed job: working long hours and placing the company`s objectives on first place, no matter all the drawbacks. The leader has to be a model for following: the more he is concentrating on the strategy itself, the bigger the involvement of the employees towards the performed job. Empowerment skills focuses on the ability of the leader to motivate, encourage and increase the employee`s confidence, clearly drawing the desired mission of the company. The last trait is the self- control ability of the leader. It focuses on techniques like working under pressure and always remaining calm. All of these trait aspects differentiate the leaders from the other human beings. The more these traits are implemented in the work place, the better the performance of the staff, consequently easier the achieving of the firm`s mission.
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According to Bill George In case of a crisis leaders need to recognize their role in creating the problems. Then they should gather their teams together and gain agreement about the root causes. Recognition of reality is the crucial step before issues can be solved. In order to understand the real reasons for the breakdowns, everybody on the leadership team must be willing to tell the whole truth. Leaders can't solve problems if they don't admit their existence. Faced with bad news, many leaders cannot believe that things could really be so bad. As a consequence, they try to convince their employees that things aren't so bad, and that quick action can make problems to disappear. This causes leaders to undershoot the mark in terms of corrective actions. As a consequence, they wind up taking a series of steps, none of which is powerful enough to correct it. Mishandling an organizational crisis can have negative, long-term consequences for a firm's profitability, reputation, market position, and human resource management systems. It is far better for leaders to anticipate the worst possible scenario and to try to be one step in front of it. In a crisis leaders must have the help of all their employees to create solutions and to implement them. This means bringing people into their confidence, asking them for help and ideas, and gaining their commitment to corrective actions. The leaders should step up and make the greatest sacrifices themselves. Everyone is watching to see what the leaders do. Will they stay true to their principles? Will they be attracted by short-term rewards, or will they make near-term sacrifices in order to fix the long-term situation? When things are going good, people resist major changes or try to get by with minor changes. A crisis provides the leader with the platform to get things done that were required anyway and offers the sense of urgency to accelerate their implementation. (The Wall Street Journal, 2010)
In a crisis situation, leadership is collective and dynamic, and it requires perception and sense making skills by leaders in order for them to determine appropriate courses of action (Walsh, 1995; Weick, 1988). An adequate crisis leadership has to include activities such as decision making, communication, creating organizational capabilities, sustaining an effective organizational culture, managing multiple constituencies, and developing human capital (Bolman & Deal, 1997; Schein, 1992)
Could Toyota have managed the situation differently, both prior and during the event to improve the outcome?
There are ten principles in order to manage a crisis effectively (Tench and Yeomans, 2009. If all of those steps were applied by Toyota, the problem would have been solved without so many damages for the company.
The first one is to define the real problem. This is the most important aspect of an effective PR crisis management. The whole action is happening prior to the problem. Its purpose is to define both the short -term problem -address the situation immediately- and the long- term problem to make sure that the company recovers in terms of both market share and reputation. (Tench and Yeomans, 2009)
The second one is to centralise or at least to control the information flow. This action is applied during the problem. It refers to the information both coming in and going out. If there is a multi- country issue, one central place is needed as the focus. In such a way communication within the company can be much easier. If the case is that it is impossible to have one centre, then all the people have to be trained in order to communicate the same message in case of a crisis.
The next step is to isolate the crisis team from the daily business concerns. While managing a breakdown the day job has to be put on hold. All the forces have to be put into the problem, finding its solution while the day-to-day responsibilities to be postponed.
The next principle is to assume the worst- case planning position
How important is 'reputation management' in terms of long term success for a company?
A reputation of a company is an important and valuable asset. A positive one may bring many benefits to a company, when a negative one may significantly harm it. It can take years to build and can be destroyed in an instant. A company reputation is closely tied up with its stakeholders' emotional beliefs about it. A reputation of a company is a must-to-have for modern business organizations and companies. The company's image may determine its popularity among its stakeholders and greatly influence their decisions, concerning it and its products. (Davis, 2007)
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First of all a reputation of an organization is made by various groups of its stakeholders, such as investors, media men, employees, customers, etc. Every company has a number of reputations, as it is perceived very differently by different groups of its stakeholders. Investors, for instance, base their reputation of company opinions on the economic figures; when ordinary customers may base it upon their first hand experience with the company's products or upon its social performances. (Davis, 2007)
It takes quite a long time to form a reputation of a company and the media coverage, sponsorship, PR and publicity may play the key part in this process. Companies view their reputation as an investment. A reputation of an organization does not remain static. Therefore the matter of great importance is to check up of the reputation status and if there is a need, make some changes. It is essential for a company to detect what factors form its reputation among various groups of its stakeholders. (Theaker, 2008)
A reputation of a company may play a crucial part in its business development and success. It may influence the decision making process of its stakeholders, concerning the company. For instance, a good company reputation may become another valid advantage for an investor, or it may become another strong cause for the customers to choose the products of this company, since a good reputation may secure the high quality of the company's products or the after service. (Theaker, 2008)
It is important to understand that the construction of a reputation of a company includes not only some objective factors, such as the company's financial stability or social activities. It contains an emotional factor. A reputation of a company is what people believe about it, their affinity to an organization. Hence, a proper approach has to be chosen to build up such reputation and to find a proper leverage for establishing and sustaining it. A positive company reputation is a precious company asset, able to produce it a rich dividend by attracting customers in long term. (Davis, 2007)
Brooks I. (2006) Organisational Behaviour. 3rd edition. London: Pearson Education Limited