How To Plan For A Crisis
This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
Bad weather, a devastating earthquake and chemical or industrial accidents can cost you plenty—even put you out of business—if you aren't prepared. But properly handled, "That which does not kill us makes us stronger," as philosopher Friedrich Nietzsche put it.
Ultimately, a crisis can be an agent for change that leads to increased flexibility and adaptability, and can help reduce the impact of future crises. Planning for, and management of, a crisis is possible.
Crisis planning
Preparing for the unknown may sound like a futile exercise, but you need to plan for how you will continue to operate, or temporarily shutdown in an orderly way, regardless of the problem.
- Systems: How will you keep automated systems operating, and create manual backups when you can’t?
- Infrastructure: How will you maintain infrastructures ranging from electrical supply to supplier deliveries?
- Public Relations: What is your public relations plan that communicates that you are aware, in control, and doing something?
For example, do you have a call ladder? You call two people, each of them calls two people, and in 10 steps, over a 1,000 people can be in personal contact. You can use the concept for employees, suppliers and even customers.
Training and simulation are keystones in disaster planning.
Federal Emergency Management Agency (FEMA), American Red Cross, The national Center for Disaster Preparedness through Columbia University, and the Center for Disease Control all offer free disaster planning courses online.
Training isn’t enough, though. The maxim that “practice makes perfect” is true. Unless you test your plans, you really can’t be sure they’ll be effective.
NASA has a telework program, for example, that’s an integral piece of their Continuity of Operations plan. So periodically, they declare a simulated emergency and designated telecommuters sign in from home.
Crisis management
When the worst does happen, you have to manage both the actual problem and perceived problems. Communication can be either the solution or the problem.
When a murderer added cyanide to Tylenol capsules, killing seven, Johnson & Johnson pulled $100 million of product off shelves and their CEO appeared on TV to explain what they were doing. Sales quickly returned to pre-crisis levels.
On the other hand, when toxic gas escaped from a Union Carbide plant in Bhopal India, communication breakdowns before, during and after the disaster only made matters worse. Crisis plans and emergency instructions were only available in English. Senior executives were put under house arrest and cut off when they arrived in India.
Management and staff blamed each other, records were changed in a massive coverup. Amazingly, sabotage was found as the probable cause, but popular reporting was allowed to ignore that “virtual certainty.” Twenty-five years later, the company is still struggling with repercussions including fines and even jail terms for two executives.
The bottom line: make communication a priority. Even when it's tempting to ignore phone calls while putting out the "figurative or literal" fire.
Crisis recovery
Properly handled, you can benefit from a crisis. Besides offering the opportunity for examination and change, a study by the University of Oxford found that post-crisis stock prices on average increased by 5 percent for the companies that were prepared. Companies that fumbled lost as much as 15 percent.
Good management can be more effective than insurance in mitigating the impact of a catastrophe. Your business shouldn't fail because Mother Nature is acting up or a man-made disaster occurs.
Create a crisis management plan that’s appropriate for your organization. Test it. Refine it. Communicate it. And use it when the time comes, because it will come. Even as this is written, there’s another hurricane headed for the East Coast.
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