Crises Management as a Critical Organizational Management Function

Crises Management As a Critical Organizational Management Function

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Crises Management As a Critical Organizational Management Function

ABSTRACT
Man-made errors and natural disasters have become increasingly prevalent in the second half of the 21st century, causing crises disruptive to the community at large and organizational infrastructure. When organizational crises ensue, leadership is obligated to respond immediately, by implementing emergency relief solutions to demonstrate corporate responsibility. This has become an organizational critical function because failure in managing a crisis can negatively affect stakeholders or sever an organization’s existence. This paper will discuss the role of crises communication in organizations, and its relevance in British Petroleum’s (BP) crises mismanagement during their April 20th 2010 Deepwater Horizon drilling rig explosion in the
Gulf of Mexico.

Key words: crises communications, crises management, British Petroleum

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Crises Management As a Critical Organizational Management Function

Man-made errors and natural disasters have become increasingly prevalent in the second half of the 21st century, causing crises disruptive to the community at large and organizational infrastructure. Research has shown an existing correlation between crisis management and its effect on an organization’s sustainability, employee retention, supply chain management and overall infrastructure. (Duncan, 2011). When organizational crises ensue, leadership is obligated to respond immediately, by implementing emergency relief solutions to demonstrate corporate responsibility. The act of enforcing standardized or customized recovery procedures in an appropriate timeframe refers to crises management. This has become an organizational critical function because failure in managing a crisis can negatively affect stakeholders or sever an organization’s existence. Crisis communication is related to managing the outcome, impact, and public perception of a crisis in an attempt to diminish damage to the corporate image. This paper will discuss the role of crises communication in organizations, and its relevance in British
Petroleum’s (BP) crises mismanagement during their April 20th 2010 Deepwater Horizon drilling rig explosion in the Gulf of Mexico. Consequently, as depicted in the case study Crisis communication strategies: A case of British Petroleum, BP’s crises communication was suboptimal and geared to mask the gravity of the social and environmental impact, in lieu of being informative and honest. A plethora of other news sources, both scholarly and web based will be reviewed to determine a concise communications framework BP could have implemented. To put the importance of crises management in context, we must understand the definition of a crisis. “A crisis occurs when an event increases in intensity, falls under close scrutiny of the news media or government, interferes with normal business operations, devalues

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Crises Management As a Critical Organizational Management Function

a positive public image, and has an adverse effect on a business’s bottom line”(Harrison, 2005).
Shrivastava offers more insight with this definition: “Crises are caused by two interacting sets of failures. Inside organizations, a complex set of human, organizational, and technological factors lead to the triggering event which interact with regulatory, infrastructural and preparedness failures in the organizations’ environments”. Human factors refer to include man-made errors or deliberate acts of war or terrorism. Organizational factors include policy failures, poor safety measures, hazardous practices, and inadequate emergency plans. Following these definitions, the aftermath of the BP explosion falls into the definition of a crises and included a crude oil leak of
780 million gallons into the sea, causing massive damages on the environment, economy and on the regional tourism. BP also suffered considerable financial and reputation losses.

Communication Framework- continuity of operations planning (COOP)
Khodarahmi suggests that there are several schools of thought as to whether crisis communication is a reactive function or proactive, long-term process. Researchers proposing the latter believe that organizations are better positioned for crises resolution if effective communication systems, stakeholder relationships and brand credibility exist pre-crisis. The proactive approach anticipates possible crises, forces a dedicated team to reduce their occurrence probability, and prepares key stakeholders to control and respond appropriately. Others argue that because crisis communication requires stakeholder interaction during the infancy of a crisis, majority of the decisions are reactive. Khodarahmi addresses the importance of planning for man-made or natural disasters through continuity of operations planning (COOP) - a tool that assists organizations to remain operational under extreme circumstances. The article further

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elaborates on the effectiveness of the process, while providing concrete examples of natural disasters and organizational responses.

Effective Crisis Communication Models and Strategies
Of the suggested theoretical models for impactful crisis management, six strategies were identified to adopt for image restoration. The first two strategies “shifting blame” and
“minimization” sway responsibility of the crises onto another party and misrepresent the gravity of the crisis. When management declines to issue a statement, they apply the “no comment” approach followed by public verbal “apology” strategy. Giving victims
“compensation” and promoting “corrective action” to prevent reoccurrence of the same problem are the logical next strategies. Given the theoretical framework and effective approaches to crises management, one can depict five BP crisis communication failures worth examining.
Lack of continuity of operations planning (COOP) planning.
Prior to the 2010 Deepwater horizon oil spill, BP’s brand was tarnished due to past disasters involving safety negligence. The BP oil rig in Sea Gem collapsed in December
1965 resulting in thirteen fatalities. On March 23, 2005, BP’s Texas City Refinery exploded. In 2006, BP identified grave pipeline corrosion after an oil spill in Alaska, resulting in fragmented operations and about $ 20 million in environmental fines. These experiences should have driven BP to embrace a proactive approach to crises communications, however investigations conducted post disaster revealed that BP was negligent with safety and did not have a coop. Khodarahmi suggests “COOP planning is an effort to assure that the capability exists to continue essential agency functions across

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a wide range of potential emergencies. The objectives of a COOP plan include ensuring the continuous performance of an agency’s essential functions/operations during an emergency; protecting essential facilities, equipment, records, and other assets; reducing or mitigating disruptions to operations; Reducing loss of life, minimizing damage and losses; and, achieving a timely and orderly recovery from an emergency and resumption of full service to customers.” According to the former BP CEO Tony Hayward to BBC ,
“BP’s contingency plans were inadequate” and that BP “was not prepared” for the Gulf oil disaster and was “making it up day to day” in the early stages. BP was ill prepared for intense media scrutiny.
Inability to take responsibility
To stabilize brand image, crises management stresses speedy responsiveness from leadership to mirror a culture of moral and social responsibility ( Todarita, 2009). With an already crumbly reputation, BP’s overdue response shifted blame, and did not present accurate facts.

This resulted in further public skeptism and rage, as BP avoided

responsibility by defending their faulty actions. Eventually BP launched a costly public relations campaign to uplift their brand image, which was still criticized by those who felt their budget could have gone towards environmental repair. The BP initial crisis communication was largely focused on legal concerns and resulted in denials of responsibility, minimization of the extent of damages and lack of useful information to stakeholders. Inadequate leadership
During crises, leaders are expected to emerge as ardent communicators’ in order to reestablish stakeholder trust and moral. This was exhibited by Western Carolina

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University chancellor John Bardo during a three-day dorm fire crisis on the campus in
Cullowhee, North Carolina. He incorporated three levels of oversight- Student Affairs,
Residential Living and finally office of the Chancellor. Using the campus Pipeline,
Student Affairs reached the student body electronically. Director of Residential living issued a letter to students in Scott Hall informing them that authorities were investigating, reassuring them that the fire protection systems had worked properly, and asking for their assistance. The chancellor held a media briefing and a series of public meetings to inform stakeholders of progress (Farmer, 2005). This was a stark contrast to former BP CEO
Tony Hayward came across as ill prepared, untrustworthy and contemptuous when qualifying the

spills

environmental

impact

as

“modest”

Ambiguous

public

communication that underestimated the volume of the spill while overestimating the capability of the company to plug the well created an image of incompetence, at best, and fraudulence, at worst. Although not his intent, statements such as “I want my life back,” and BP cares for the “little people” made Hayward appear calloused and further burdened the company. “relatively tiny” in comparison with the big size of the ocean. He also told a news cameraman to “get out of there”, complained that he wanted his life back stating to reporter that “ There’s no one who wants this thing over more than I do, I’d like my life back”, and went to watch his yacht race while oil spews into the Gulf. As a consequence, the former BP CEO has become the most hated man in the United States.
Resistance of media collaboration
According to Todarita, media plays a crucial role in crises management as this is the platform for leadership to communicate their redemption message to the masses. In today’s age of instant information through social media and advanced technology,

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stakeholders will go directly to the media for information. The article states that it is important to view the media as a strategic partner, rather than a liability however BP limited exposure to the press, and censured the flow of information to the public. It was reported that BP (with the complicity of the Federal Aviation Administration and the
Coast Guard) denied access to planes carrying media and threatened them with arrest for documenting oil spill. Crisis communicators should engage the media, through open and honest communication, and use the media as a strategic resource to aid in managing the crisis. CONCLUSION
In crises management, credible brand image and leadership are key in establishing public confidence. Public support is earned through leadership’s acceptance of responsibility, honest communication empathy for victims. During the post explosion crises mismanagement, BP did not exhibit stellar leadership; inaccurate communication minimized the effects of the disaster and the absence of a coop left management incompetent at responding in a timely fashion. Although this event occurred three years ago, BP has just recently embraced the mode of crisis management. BP has launched periodic social campaigns to promote their commitment to corporate social responsibility.
Their focus should be on finding a new purpose and executing grassroots programs that have positive impact on education and health in underserved communities. The world is results oriented, and only results will communicate a renewed promise of corporate social responsibility with a genuine and generous dedication to its post-crisis response.
Consciously attending to the complex emotional and financial needs of victims, and addressing the complex and lasting emotional toll on residents are essential. Simply put,

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BP must implement a long-term commitment to the drive recovery of the gulf coast and its residents.

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References

Todarita, E., & Ranf, D. E. (2009). The Necessity and Efficient Usage of Managerial
Communication Within Organisations During Crisis Situations. Drawing-Up the Content of a
Crisis Planning. Annales Universitatis Apulensis : Series Oeconomica, 11(2), 796-804. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.proquest.com/docview/763421618?accountid=1
4580

Dutta, S., & Pullig, C. (2011). Effectiveness of corporate responses to brand crises: The role of crisis type and response strategies. Journal of Business Research, 64(12), 1281. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.proquest.com/docview/894051776?accountid=1 4580

Farmer, B., & Tvedt, L. (2005). Top Management Communication During Crises: Guidelines and a 'Perfect Example' of a Crisis Leader. Public Relations Quarterly, 50(2), 27-31

Harrison, G. A. (2005). Communication strategies as a basis for crisis management including use of the internet as a delivery platform. (Order No. 3215418, Georgia State
University). ProQuest Dissertations and Theses, , 359-359 p. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.proquest.com/docview/304999784?accountid=1 4580. (304999784).

Valvi, A. C., & Fragkos, K. C. (2013). Crisis communication strategies: A case of British
Petroleum. Industrial and Commercial Training, 45(7), 383-391. doi:http://dx.doi.org/10.1108/ICT-04-2013-0026 Duncan, W. J., Yeager, V. A., Rucks, A. C., & Ginter, P. M. (2011). Surviving organizational disasters. Business Horizons,54(2), 135. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.proquest.com/docview/853697390?accountid=1 4580

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