Organisational Crisis; Antecedents, Challenges, Solutions Prof. Zachary Sheaffer Dept. of Economics & Business Administration Ariel University th 16 Haifa University COHRM Crisis Management 29 April, 2015 The English word “crisis” is 危机 in Chinese. It has two Chinese characters: 危 means danger, threats and 机 implies opportunities. 23 Sept. 2008 NYC Stock Exchange Vietnam 1966 ECONOMIC WAR Twin Towers 20 11 2001 TERROR Tsunami Fukushima 11 March 2011 NATURAL DISASTERS An organisational crisis is a high impact event that threatens the viability of the organisation and is typified by vagueness of cause, effect and means of resolution, as well as by a belief that decisions must be made swiftly. Organisational crisis is a multidimensional event encompassing all organisational components in a vicious circle, is perceived by stakeholders as threatening organisational viability & experienced by them as threatening both personally & socially. The ambiguity accompanying the cause, influence & solution results in disillusions or inability to interpret the situation. It shatters common beliefs, values & basic personal assumptions. Decision-making process is affected by strict time constraints and is exacerbated by cognitive limitations. Bankruptcy Date: 09/15/2008• Assets: $691 billion• 09/26/2008• Washington Mutual Assets: $327.9 billion• 07/21/2002• Assets: $103.9 billion• 12/17/2002• Assets: $61 billion• 06/01/2009• Assets: $91 billion• 11/01/2009• Assets: $71 billion• 04/30/2009• Assets: $39 billion• 12/02/2001 Assets $ :65.5 billion Israel’s national budget (2013-14) 101 Billion US$ The Event Approach: A crisis as an adverse event.  Typically, the 1982 Tylenol poisoning (Heath & Palenchar, 2009) and the 1986 Chernobyl disaster (Falkheimer & Heide, 2006)  Logical conceptualisation of CM as a chiefly tactical activity focussed on incident response (what to do when a crisis occurs and how to prepare for it in case it happens  Functional activities critically important for successful organisational crisis response and recovery  “A crisis is a sudden and unexpected event that threatens to disrupt an organisation’s operations and poses both a financial and reputations threat” (Coombs, 2007)  “A crisis is an unplanned (but not necessarily unexpected) event that calls for real-time high level strategic decisions in circumstances where making the wrong decisions, or not responding quickly or proactively enough, could seriously harm the organisation” (Davies, 2005)  The event approach typically positions CM structurally alongside operational or technical functions (security or emergency response, public affairs: media or community relations). The Process Approach Recent developments views CM as an evolution beyond operationalised response Essentially, a growing awareness that proactive managers can and should be prepared to avoid a crisis happening, 1st and foremost Increasing acceptance of CM as part of a process continuum, which builds on the recognition that: (a)most crises are not sudden events but follow a Root Causes CRISIS SYSTEMS SYSTEMS 1. Technology 3. Human Factors 1 2 3 2. Org Structure/Strategy 4 5 4. Culture 5. TMT Psyche