Definition of a Crisis
A crisis is any event that threatens a business’s normal operations. Also, it is an unexpected occurrence that may adversely impact an organization’s stability (Al-Khrabsheh & Al-Baiqah, 2018). A crisis occurs due to external and internal factors. Several events will be addressed in the crisis management plan. For instance, a financial crisis emanates when a company loses significant financial resources. It makes it challenging for a firm to meet its debt and financial obligations. The primary factors contributing to a financial crisis include abrupt changes in market trends, market loss, bankruptcy, inflation, and revenue loss (Vašíčková, 2020). Financial crises compromise a firm’s ability to serve its clients more effectively. Also, technological crises occur when a company’s systems and tools fail to function as expected. They encompass industrial accidents and software and hardware failures. A company will lose significant revenue if its technological systems crash or are hacked. Therefore, it should invest in backup systems to deal with these technological crises.
Furthermore, a personnel crisis emanates when an employee engages in unethical and illegal behaviors that adversely impact a company’s reputation in its operating environment. A company’s reputation will be affected due to negative comments from senior employees and workplace conflict. Taking the most appropriate disciplinary measures will allow a company to protect its reputation and address the emerging personnel crisis. A deception crisis occurs when executives or employees misrepresent organizational details, such as the financial statement (Vašíčková, 2020). It is likely to mislead potential investors and other stakeholders. Natural crises can also threaten a company’s operations. They occur when various disasters, including hurricanes, tsunamis, and tornadoes, disrupt a firm’s business activities. Companies can address natural crises by building structures that withstand disasters and other extreme weather events.
Confrontational crises occur when employees with specific demands are involved in strikes and other actions to compel the management to address their needs. They can lead to go-slows and boycotts within the workplace. A malice crisis emanates from unhealthy competition and rivalry (Vašíčková, 2020). For instance, a rival firm can launch a smear against another company. A malice crisis creates situations where a company loses its market share and public trust. Also, it can occur when people write negative comments about a company and its products.
Stakeholders and their Roles
One stakeholder to be involved in the crisis management plan is Reliant Energy Company’s communication manager. The communication manager will be required to inform all employees and other stakeholders about the crisis management plan. Also, they will be expected to provide details regarding the steps that the company is undertaking to address different types of crises. A cross-functional team comprising senior employees will be created to develop the communication plan. It will consist of a restructuring consultant, a financial advisor, and an attorney. The company’s CEO is another critical stakeholder that will be involved in the crisis management plan. They will be expected to collaborate with other internal stakeholders to develop the most effective strategy for addressing emerging crises. The CEO will also manage vital relationships with government regulators, customers, investors, and employees. The financial director will be required to provide the necessary funds for Reliant Energy Company to address the crises more effectively (Vašíčková, 2020). They will track all the company’s expenses during crisis management and response. In addition, the customer service representative will inform clients about the steps the firm is undertaking to address the crisis.
Furthermore, the human resource manager will develop materials to train employees about the developed crisis management plan. Also, the IT department will respond to technical failures that may adversely impact Reliant Energy Company operations. The security manager will have a critical role in the crisis management plan. They will evaluate the management plan’s security provision. Also, they will handle site security during an adverse event. The health and safety manager will develop strategies for maintaining employees’ welfare during the crisis. They will conduct damage assessments after the adverse event. The legal specialist will advise the organization on regulatory liabilities and implement actions to mitigate adverse impacts (Al-Khrabsheh & Al-Baiqah, 2018). Moreover, they will devise a plan for sharing confidential information with other stakeholders. The command center manager will ensure Reliant Energy Company has the necessary utilities, supplies, and equipment to support its operations during the crisis. The business recovery manager will provide critical details on how the company’s operations should be restored after the emergency.
Business Best Practices
Several practices will be implemented to protect assets, facilities, equipment, and employees during a crisis. During a crisis, Reliant Energy Company will take the necessary steps to evacuate employees to safe places. This practice will be essential if adverse weather events, such as floods and tornadoes, affect the company’s operations (Al-Khrabsheh & Al-Baiqah, 2018). A system will be installed to warn employees about an impending crisis. A team leader will be appointed to ensure employees are evacuated to safe places. Also, a list of all employees will be created to account for all individuals within the organization (“UIC Additional Global Security Program,” 2017). Potential shelters that can be used to house employees during a crisis will be created. The organization will ensure these shelters can contain all employees during an emergency. Employees will be trained on how to respond to gunfires and other threats. In addition, Reliant Energy Company will provide extra assistance to vulnerable workers, such as employees with disabilities. It will equip employees with protective equipment to protect them during emergencies. The company’s managers will devise a plan for reaching out to employees who may be adversely impacted by the crisis. Reliant Energy Company will suspend some of its operations until all the affected employees have fully recovered. It will also provide different benefits and privileges to all the affected employees.
Reliant Energy Company will further implement practices to protect its facilities, assets, and equipment during a crisis. These practices’ core objective will be to minimize damage to the company’s property (Al-Khrabsheh & Al-Baiqah, 2018). Physical security perimeters will be established to protect the company’s assets, facilities, and equipment. Using card-controlled doors and barriers will protect Reliant Energy Company’s assets during a crisis. The physical security perimeters will help the company protect areas with confidential and sensitive information (“UIC Additional Global Security Program,” 2017). Approval will be required before anyone can access high-risk areas, such as data centers. Windows and doors to rooms containing information systems and other critical assets should be locked to prevent unauthorized entry. In addition, the company will ensure its facilities and equipment are safely stored during floods, civil unrest, and fires. Fire suppression systems will be implemented to protect the company’s assets. The company will implement systems to protect its assets from damage from water leaks. These systems will allow the firm to reduce risks of various environmental hazards and threats.
Information assets, such as computers, should be protected from theft during a crisis. Prior consent will be required before these assets are removed from the organization. These information assets will also be encrypted to ensure unauthorized people do not have access to sensitive details. The security department will ensure the company’s assets are safe and protected from third-party access.
Consequences of not having a Crisis Management Plan
Companies lacking a crisis management plan will likely face several negative consequences. They may experience challenges responding to crises more effectively. When crises occur, these firms will record negative impacts, such as security breaches and reputational damages. Consequently, they will experience a loss of public trust due to their inability to handle emergencies. Also, companies lacking this plan will record a massive loss of revenues when crises strike. Loss of revenues will be recorded since the crises can adversely impact a company’s operations (Al-Khrabsheh & Al-Baiqah, 2018). In addition, employees and other stakeholders may be unaware of the most practical steps to take to respond to and manage a crisis. A slow response to the crisis will occur if an organization lacks a well-defined crisis management plan. It will increase the cost of rebuilding and repairing facilities that have been damaged during a crisis. Companies lacking this plan will lose their customers, investors, and suppliers due to the ineffective handling of an emergency. Some stakeholders may file lawsuits that may damage an organization’s reputation. These lawsuits may be filed due to losses from a company’s failure to respond to crises appropriately. Crucial personnel may also depart an organization without a practical crisis management plan. Other negative consequences include reduced staff morale, physical harm to employees, and loss of the company’s assets.
References
Al-Khrabsheh, A. and Al-Baiqah, A. (2018). Impact of strategic planning on crisis management in the profit and non-profit sector in Jordan. Academy of Strategic Management Journal, 17(5), 1-12.
UIC Additional Global Security Program (2017). Recommendations for crisis management. UIC Additional Global Security Program.
Vašíčková, V. (2020). Crisis management process: A literature review and a conceptual integration. Acta Oeconomica Pragensia, 27(3-4), 61-77.
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