Meaning and Significance of Corporate Crisis Management

What is Corporate Crisis Management ?

We live in a world that is uncertain and unpredictable. Hence, our best-laid plans can go bust because of a variety of reasons, not many of whom are under our control. This is the case with corporates as well and especially so in this turbulent age where the global odds and complexity coupled with rapid change and fluidity mean that corporates have to be ready for any eventuality.

Therefore, crises must be anticipated and when they take the corporates by surprise, there must be a team or a department that can first respond to the external world and then the management can initiate appropriate strategies to deal with it.

For instance, the global carmaker Toyota had to recall nearly a million vehicles because of defects in the structure. This is a corporate crisis that needs deft and savvy media management because the brand image of the company can take a hit if the perceptions are not managed properly.

Similarly, when Apple was hit by accusations that it was sourcing its components from sweatshops in China, the corporate communications team had to swing into action and reassure the external world that the situation was being managed.

Significance of Corporate Crisis Management

The examples cited above are just representative ones and there are innumerable cases where corporates had to manage the media and the external world in response to crises. In India, the Satyam scandal meant that the continuity of business programs had to be rolled out and the media called for a detailed briefing.

Similarly, when Infosys announced that they were delaying the joining dates of fresh recruits, they had to similarly battle negative reporting in the media. All these cases call for exceptional corporate communications teams and the way in which these crises are handled goes a long way in shaping public perceptions about the company.

Considering the fact that we live in a 24/7 news culture where perceptions change by the minute there is a need to handle and manage the media more than ever. In addition, when crises strike, there is a clear need to handle the aftermath of the crises and manage the news cycle to the advantage of the company.

Lack of Crisis Management leads to Chaos

What happens when corporates are unable to handle crises effectively? The result is that there would be chaos and confusion about the way in which the message is being sent.

For instance, the ailing airline, Kingfisher, made such a bad job of conveying their position to the media in the context of the crisis over its operations that the consumers formed an image of a company whose management did not care about them. This case highlights why it is necessary to have competent crisis management teams and the corporate communications department is the first point of contact with the external world.

In conclusion, corporate crisis management is a critical function of any corporate and the way in which the corporates handle the crises reflects how well the investors, consumers, and the regulators view the corporate.