Understanding Crisis Management and Its Importance

It is a mistake to think that a company cannot be hit by a crisis. Every business, no matter the segment or size, is subject to problems involving its image, whether due to natural disasters, legal nature, equipment or service failures, work accidents, or tax obstacles.

It is to deal with these moments that crisis management exists. In this article, understand what it is, how important it is, and how to invest in this set of practices that can save your business from many losses.

What is Crisis Management?

Crisis management, also called crisis management, is a set of practices that aim to deal with an unexpected problem, internal or external, that can cause financial damage and damage to the company’s reputation. This type of problem often happens unexpectedly, poses a threat to the business, and requires quick decision-making.

In addition to dealing with problems as they occur and the effects they cause, crisis management also includes identifying sources of risk to deal with before the crisis sets in.

Since dealing with crises in the best way is critical to the survival of companies, many businesses create a contingency plan in advance, which must be followed as soon as problems arise. In addition, it is necessary to learn from the mistakes that have already occurred, devising strategies so that they do not happen again.

How Important is Crisis Management?

Crisis management ensures that the company reduces the damage caused by problems that arise suddenly and that, if not well resolved, can even cause the business to go out of business. Here are some reasons why companies should invest in good crisis management:

  • Act quickly and efficiently when faced with a problem;
  • Contribute to the company’s survival in the market;
  • Preserve the company’s reputation in the market;
  • Reduce the impact of the crisis, both internally and externally;
  • Learn from mistakes, avoiding them in the future.

How to Plan Crisis Management?

Being in the market is being constantly exposed to crises. That is why it is important to have prior crisis management planning to preserve the company’s credibility and image, preventing any negative impact or even using it as an opportunity to intensify or generate new business.

There is no magic rule or mathematical model that can and should be followed for these moments of conflict, so each company must work according to its reality and be constantly updating itself. However, some points can avoid or help to minimize the perceived effects of the repercussion of the crisis:

1. Know Your Customers’ Perception

Knowing your customers’ perception of your company also helps to avoid crises. But how?

Through this information, it is possible to understand how your business is seen in the market. To find out, user satisfaction and brand image surveys. By monitoring customer satisfaction, the company understands how the customer relates to it, whether they are satisfied and whether they are loyal. It also better understands how to communicate with these people.

By creating this relationship with the consumer, it will be easier to overcome crises.

2. Invest in Customer Experience

Offering a good experience is indispensable in a competitive market like the current one. What you may not know is that this action also helps to deal with crises.

This is because, if a customer has a good experience with the company, it is easier to retain them. If, in addition to going through a crisis, the business offers a bad product or service, or even poor quality service, it will be easy to replace it.

3. Assemble a Crisis Management Committee

The company does not need to have employees exclusively dedicated to crisis management, but it is important to have a group of people whose attribution, even if partial, is to deal with these problems when they arise.

This team must be multidisciplinary, formed by the CEO and also by a legal representative, in addition to managers from the different departments. It is also important to have public relations or marketing professionals.

4. Understand What Risks the Company Runs

Before drawing up the crisis management plan, it’s a good idea to know the company’s weaknesses.

Every business has risks and some may be more obvious for certain businesses. To find yours, get the crisis management committee together and list possible problems that may occur. Hence the importance of having a multidisciplinary team, by the way. That way, no potential risk is left out.

Customer feedback is another good source of company weaknesses. Look at the responses consumers have given to the surveys you’ve done and raise the potential risks.

5. Create a Crisis Management Plan

Planning for crisis management should start well before problems arise. At this point, the company must work on its image and prepare for any problems that may arise.

It’s hard to make predictions, but having a team and a preparedness plan goes a long way when (and if) the crisis hits. When the company is not prepared, on the other hand, it is easier to make bad decisions in the heat of the moment. The business can also make inaccurate or misaligned statements, extending the problem.

It is important not to use a generic model, but to make a personalized plan for your business, considering the risks raised above. The crisis management plan should include:

  • Who are the members of the crisis management committee;
  • What are the criteria for identifying whether the problem is a crisis or not;
  • What are the monitoring practices to identify a crisis in the early stages; signals
  • Who are the spokespersons for each channel in the company;
  • Who are the emergency contacts;
  • What are the processes for assessing the severity of the crisis;
  • What are the procedures for responding to the crisis;
  • How to assess the effectiveness of crisis management after the work has been done.

6. Know How to Communicate

Communicating in the right way with customers, the market, and stakeholders is essential in times of crisis. Therefore, it is not enough to define a spokesperson, it is necessary to know how to communicate well and say the right things.

The chosen spokesperson must know how to deal with the media and feels comfortable in different media. The crisis management team must assist in the preparation of coherent statements for the press, always striving for transparency.

7. Work Consistently and Continuously

After the crisis, after all the wear and tear, keep in mind that the work is not over yet. Remember that a company’s image is built over the years, so the damage suffered will not be recovered overnight.

This moment serves to analyze and reflect, based on the data collected, on the positive and negative points caused by the crisis, its reflexes in the opinion of the customers, the means of reviewing created processes, the training of areas and, still, improving the planning with the responsible.

Crisis management work must be consistent and the business must learn from past mistakes, always seeking to update the management plan.

In addition, crisis management goes hand in hand with other teams such as marketing, branding, and customer service. All these teams must keep in mind the problems brought about by the crisis, working continuously to reverse the damage.