Organization's Crisis Management

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An organizational crisis is a “low probability high impact situation perceived by critical stakeholders to threaten the viability of an organization” (Pearson and Clair 1998). It may include hostile takeover in an organization, copyright infringement, security breach, or a natural disaster that destroys organizational informational base. Crisis response is the systematic attempt by the members of an organization to avert crisis or to manage it if it occurs. Crisis preparation involves setting up contingency plans that help an organization manage crisis. This essay focuses on how models presented by Paraskevas and Pearson & Clair are oriented to response or change preparation. It also discusses how assumptions and beliefs impact whether an organization is more crisis-prepared or prone by using McConnell and Drennan’s argument. Lastly, it explains how response and preparation impact learning from failures.

Certain models presented by Paraskevas and Pearson & Clair are oriented to change response while others are oriented to change preparation. The crisis management model by Pearson and Clair is oriented towards change response. It explicitly recognizes both subjective and objective components of change. This model first considers crisis management outcomes and then describes contributing outcomes that impact the degree of organizational success or failure from crisis. It proposes that no organization will respond to change in a manner that is completely effective or ineffective (Pearson and Claire 1998). Organizational crisis management preparation model is oriented towards change preparation. It argues that the perception of senior executives determine cultural beliefs in the organization about the value and the need of crisis management. If executives believe that their company is immune to crisis, then they will put fewer plans and procedures for crisis preparation and prevention (Pearson and Clair 1998). Paraskevas proposed the model of the complexity science lens that is oriented towards change preparation. This model states that due to continuous change in both internal and external organizational environments, initial conditions of a crisis constantly change with significant effect on organization’s fitness landscape (Paraskevas 2006). Moreover, it states that although an organization may have prepared itself against crisis, these plans may become ineffective under some other conditions since they may fail to adapt to higher performance levels on organization fitness landscape. This model is also oriented towards change response. It argues that crisis response is a complex system that has the ability of learning from the environment and changing the internal structure of an organization in order to change the behavior of its individual elements (Paraskevas 2006).

Core assumptions and beliefs impact whether an organization is more crisis-prone or crisis-prepared. According to McConnel & Drennan (2006), differing organizational goals, culture, and resources determine whether an organization is more crisis-prone or crisis-prepared. Some organizations argue that since crises are low probability events, it is not necessary to allocate resources that will help to manage crises in case they occur. This belief is mainly caused by poor intelligence gathering techniques and cultural blind spots. Furthermore, most people argue that since there are constraints in the public expenditure, it is necessary to allocate funds to health and education sectors and not to contingency planning to avert crises (McConnel & Drennan 2006). This is because crises are low probability events. If an organization believes that it is important to set up contingency plan to manage crisis then it will allocate more money to help in managing this crisis, and thus it would be more crisis prepared. Furthermore, an organization will be crisis prepared if it believes in integration with other institutions by sharing common goals, plans, strategies, and allocation of resources (McConnell and Drennan 2006). This is because through integration, better decisions will be made regarding more effective methods of crisis management through consultation. In addition to this, contingency planning on crisis management will be more effective since it includes all stakeholders due to integration.

Response and preparation impact learning from failures in several ways. According to Carmeli and Shaubroeck (2008), many crises could be prevented if participants learnt new behaviors. An organization needs to look for new behavior patterns after it experiences failure and. It has to refrain from previous behaviors in order to prepare itself to any crisis. Learning from failures may occur in two responses that include first order problem-solving behavior and second order problem solving behavior. First order problem solving behavior only ensures continuity of operation of services in an organization without looking at the causes of a particular failure. This approach is not appropriate for crisis response and preparation. However, second order problem solving behavior is appropriate for crisis response and preparation since it addresses organization’s failure by correcting the causes of the failure and informing other people in the organization about the possibility of occurrence of this failure (Carmeli and Schubroeck 2008). Weick claimed that if an organization detects triggering events of a crisis as well as ways in which small sense-making actions become large senseless disasters, it will understand how to isolate and mitigate crises. He also argued that experience is the source of learning, and thus an organization would be better prepared to crisis and would respond to crisis faster if it learned from its previous failures.

To conclude, crisis management model presented by Pearson and Clair was oriented towards change response since it recognizes that no organization will respond to change in a manner that is completely effective or ineffective. Furthermore, organizational crisis management preparation model is oriented towards change. The model of complexity science lens proposed by Paraskevas is oriented towards response change and preparation. Core assumptions and beliefs define whether an organization is crisis prepared, since some managers fail to allocate enough funds for contingency planning and crisis management, since they believe that crises have low chances of occurrence. Both response and preparation impact learning from failures since an organization prevents crises by learning new methods of crisis prevention.

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