Crisis management is the process by which an organisation responds to a sudden emergency situation. These crises can be defined as anything that negatively threatens an organisation’s operation and will have negative consequences if not handled effectively.
With how rapidly news stories break and become viral in the current news climate, a business having a thorough and efficient crisis management plan can mean the difference between damaging their brand or giving themselves an image boost.
A crisis management plan is designed to help lessen or in some cases completely avoid damage inflicted by a crisis. It is used as a reference tool and provides prompts to allow a team act appropriately. It typically consists of pre-crisis, crisis response and post-crisis phases. While no crisis is ever the same and crisis management plans will be different for banks, hotels, and restaurants – the structure remains the same.
Pre-crisis: good preparation can greatly reduce the risks that lead to a crisis. Having an updated management crisis plan each year, a designated and properly trained crisis team and pre-drafted crisis management messages are all ways to be prepared.
Crisis response: This is the phase where management is responding to the crisis. Responses need to be swift, with initial response being ideally within the first hour. All facts shared with the public should be accurate and consistent. All communication channels should be utilised and expressions of concern for those effected by the crisis should be made. Finally, employees should always be kept in the loop and counselling should be offered to victims and their families if applicable.
Post-crisis: this phase looks for ways to better prepare for the next crisis and promises made to stakeholders during the crisis should be fulfilled. Stakeholders should also be kept updated on the progress of recovery, investigation and corrective measures being taken.
Below, the response given by BP during the BP oil spill crisis will be examined to give a real-world sample of how poor crisis management planning can impact a business.
On the 20th of April 2010, the Deepwater Horizon drilling rig exploded and dumped 4.9 million barrels of oil into the Gulf of Mexico. Flow was officially sealed on the 19th of September 2010. BP shares fell to their lowest levels in 14 years and their products were boycotted during this time. The reputational damage remained for years after the disaster and dozens of lawsuits from fishers, hotels, restaurants, and conservation organisations were filed. BP was criticised for its response to the disaster and is often given as an example of poor crisis management. So, what did they do wrong?
In initial statements, BP blamed the spill on contractors. This was not received well by the public and BP appeared arrogant to many people. The CEO of BP, Tony Hayward, stated that the environmental impact would be “very, very modest”, something he had no factual basis for, and that “no one wants this thing over more than I do. You know, I’d like my life back”. Both of which are very insensitive and ill-advised comments.
This initial response is an example of what occurs if a crisis management plan is not in place. Hayward admitted in an interview that BP was “making it up day to day” and was not prepared to deal with the intense scrutiny from the media and public. If Hayward had proper media training, it is far less likely that he would have made his insensitive comments and avoided backlash. Moreover, a crisis plan would have allowed the company to evaluate how the public would respond to denials of responsibility.
To try and win back public favour, BP aired multimillion-dollar ads across national TV in the USA, pledging “we will make this right” and that they would “restore the shoreline to its original state”. This was a bad crisis management tactic for many reasons. It was pointed out by President Obama that the money would’ve been better spent compensating small business owners and funding clean up efforts. Most importantly though, the message in the ads deviated from their crisis management plan.
The plan outlined that “no statement shall be made containing any of the following: promises that property, ecology or anything else will be restored to normal”. But by ignoring this aspect of plan, BP left themselves with a huge promise that they may not have been able to keep and opened themselves up to further criticism down the line.
The massive financial cost to BP to compensate five states in the Gulf area and local governments over the next 12 years as well as claims from business owners and residents that say they were harmed is negative enough for the company, however – through their lack of transparency and lack of sensitivity for victims – they made a bad situation even worse.
Their reputation is still viewed negatively 8 years later and are a prime example of the damage lack of crisis management planning can do.