Issues Management
and Crisis Management
Chapter 6
Prepared by Deborah Baker
Texas Christian University
Business and Society: Ethics and Stakeholder Management, 7e Carroll & Buchholtz
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Copyright 2009 by South-Western, a division of Cengage Learning. All rights reserved
Chapter 6 Learning Outcomes
1. Distinguish between the conventional and strategic
approaches to issues management.
2. Identify and briefly explain the stages in the issues
management process.
3. Describe the major components in the issues
development process and factors in actual practice.
4. Define a crisis and identify the four crisis stages.
5. List and discuss the major stages or steps involved in
managing business crises.
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Chapter 6 Outline
Issues Management
Crisis Management
Summary
Key Terms
Discussion Questions
3
Introduction to Chapter 6
This chapter focuses on issue and crisis
management, and the planning processes
required to improve stakeholder management
and to respond to stakeholder expectations.
4
Issues Management
Conventional Approach Narrow Focus
Strategic Management
Approach Broad Focus
5
Issues Management
Conventional Approach
Issues fall within the domain of public policy or public affairs
management.
Issues typically have a public policy / public affairs orientation or flavor.
An issue is any trend, event, controversy, or public development that
might affect the corporation.
Issues originate in social / political / regulatory /
judicial environments.
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Issues Management
Strategic Management Approach
Issues management is typically the responsibility of senior line
management or strategic management staff.
Issues identification is more important than it is in the conventional
approach.
Issues management is seen as an approach to the anticipation and
management of external / internal challenges to the company
strategies, plans, and assumptions.
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Strategic Issue Management
Figure 6-2
88
Issues Definition
A matter that is in dispute between
Issue parties. The dispute evokes debate,
controversy, or differences of opinion.
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Issues Definition
Characteristics of an Emerging Issue
Terms of the debate are not clearly defined
Issue deals with matters of conflicting values
and interest
Automatic resolution is not available
Issue is often stated in value-laden terms
Trade-offs are inherent
10
Issues Management Process
Basic Assumptions
Issues can be identified earlier, more completely, and more
reliably
Early anticipation widens the range of options
Early anticipation permits study and understanding of the full
range of issues
Early anticipation permits organization to develop a positive
orientation towards the issues
Organization will have earlier identification of the stakeholders
Organization will be able to supply information to influential
publics earlier and more positively, creating better
understanding
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Model of Issues Management Process
Identification
Identificationof
ofIssues
Issues
Analysis
Analysisof
ofIssues
Issues
Prioritization
Prioritizationof
ofIssues
Issues
Formulation
Formulationof
ofIssue
IssueResponses
Responses
Implementation
Implementationof
ofIssue
IssueResponses
Responses
Evaluation,
Evaluation,Monitoring,
Monitoring,and
andControl
Controlof
ofResults
Results
Figure 6-3 12
Identification of Issues
Scan
Scan the
the environment
environment
Identify
Identify emerging
emerging issues
issues and
and trends
trends
13
Identification of Issues
Leading Forces as Predictors of Social Change
Leading events
Leading authorities / advocates
Leading literature
Leading organizations
Leading political jurisdictions
14
Identification of Issues
Figure 6-4
15
Issues Selling and Buying
Relates to middle managers exerting
Issues upward influence in organizations as
Selling they try to attract the attention of top
managers.
Top managers adopt a more open
Issues
mind-set for the issues that matter to
Buying their subordinates.
16
Analysis of Issues
Who (which stakeholders) is affected by the issue?
Who has an interest in the issue?
Who is in a position to exert influence?
Who has expressed opinions on the issue?
Who ought to care about the issue?
Who started the ball rolling? (Historical view)
Who is now involved? (Contemporary view)
Who will get involved? (Future view)
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Ranking of Issues
Xerox Approach Probability-Impact Matrix
High priority
Impact on Company
High
Nice to know
Questionable
Medium
PPG Approach
Low
Priority A
Priority B Low Medium High
Priority C Probability of Occurrence
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Filtering and Ranking of Issues
Figure 6-5 19
Ranking of Issues
Five Filter Criteria
1. Strategy
2. Relevance
3. Actionability
4. Criticality
5. Urgency
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Other Issues-Ranking Techniques
Polls
Polls/ /Surveys
Surveys
Expert
Expertpanels
panels
Content
Contentanalysis
analysis
Delphi
DelphiTechnique
Technique
Trend
Trendextrapolation
extrapolation
Scenario
Scenariobuilding
building
Use
Useof
ofprecursor
precursorevents
eventsor
orbellwethers
bellwethers
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Formulation and Implementation
of Responses
Formulation The response design process
Implementation The action design process
Plan clarity
Resources needed
Top management support
Organizational structure
Technical competence
Timing 22
Issues Development Process
Issues
The growth process or life cycle
Development
of an issue
Process
23
Issue Development Life Cycle Process
Figure 6-6 24
Issues Management in Practice
Companies that adopt issues management processes
develop better overall reputations
develop better issue-specific reputations
perform better financially
Provides a bridge to crisis management
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Crisis Management
To manage a crisis one first must understand that crises:
Occur abruptly
Cannot always be anticipated or forecast
May not occur within an issue category
@ [Link]
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Crisis Management
Basic Causes of a Business Crisis
1. Acts of God
2. Mechanical problems
3. Human errors
4. Management decisions / indecisions
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The Nature of Crises
Crisis Definitions
A major, unpredictable event that has potentially negative
results and its aftermath may significantly damage an
organization and its employees, products, services,
financial condition, and reputation.
A low-probability, high-impact event that threatens the
viability of the organization and is characterized by
ambiguity of cause, effect, and means of resolution, as
well as by a belief that decisions must be made swiftly.
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Crisis Management
How a Crisis Should NOT be Handled
Minimizing the issue
Stonewalling
Too little, too late
From Figure 6-7 29
Types of Crises
Economic
Economic
Physical
Physical
Personnel
Personnel
Criminal
Criminal
Information
Information
Reputational
Reputational
Natural
Natural disasters
disasters
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Types of Crises
Outcomes of Major Crises
Escalated in intensity
Subjected to media and government scrutiny
Interfered with normal business operations
Damaged the companies bottom line
Resulted in major power shifts
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Crisis Management: Four Stages
Prodromal
ProdromalCrisis
CrisisStage
Stage Acute
AcuteCrisis
CrisisStage
Stage
Warningprecursor
Warningprecursor Point
Pointofofno
noreturn
return
Symptom
Symptomprecrisis
precrisis Crisis
Crisishas
hasoccurred
occurred
Learning
Chronic
ChronicCrisis
CrisisStage
Stage
Crisis
CrisisResolution
ResolutionStage
Stage Lingering
Lingeringonperhaps
onperhaps
Patient
Patientisiswell/
well/ indefinitely;
indefinitely;period
periodofofself-
self-
whole
wholeagain
again doubt;
doubt;self-analysis
self-analysis
Figure 6-8 32
Pattern of a Poorly-Managed Crisis
Early indications that trouble is brewing occur.
Warnings are ignored / played down.
Warnings build to a climax.
Pressure mounts.
Executives are often overwhelmed or cant cope.
Quick-fix alternatives look appealing. Hasty moves create
trouble.
Clamming-up versus opening-up options present themselves.
Most firms choose the former.
A siege mentality prevails.
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Managing Business Crises
Finks Three-Stage Model
1. Identifying the crisis
2. Isolating the crisis
3. Managing the crisis
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Managing Business Crises
BusinessWeeks Five Steps in Managing Crises
1. Identify areas of vulnerability
2. Develop a plan for dealing with threats
3. Form crisis teams
4. Simulate crisis drills
5. Learn from experience
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Managing Business Crises
Monsantos 10Rs for Handling Public Policy Crises
Respond early
Recruit a credible spokesperson
Reply truthfully
Respect the oppositions concerns
Revisit the issue with follow-up
Retreat early if its a loser
Redouble efforts early if its a critical company issue
Reply with visible top management
Refuse to press for what is not good public policy
Repeat the prior statement regularly
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Managing Business Crises
Augustines Six Stages of Crisis Management
1. Avoiding the crisis
2. Preparing to manage the crisis
3. Recognizing the crisis
4. Containing the crisis
5. Resolving the crisis
6. Profiting from the crisis
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Crisis Communications
1. Identify crisis communication team
2. Identify key spokespersons
3. Train your spokespersons
4. Establish communications protocols
5. Identify and know the audience
6. Anticipate crises
7. Assess the crisis situation
8. Identify key messages to communicate
9. Decide on communication methods
10. Be prepared to ride out the storm
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Components of Crisis Plans
Media communications 99%
Employee communications 98%
Crisis management team 94%
Communications with elected officials 86%
CEO / senior executive involvement 82%
Documentation / written policy / handbook 81%
Website communications 77%
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Be First, Be Right, Be Credible
Get
Get message
messageout
outfirst
firstto
to control
control
Be
Be First
First content
content and
andaccuracy
accuracy
Be
Be Right
Right Say
Sayand
anddo
dothe
theright
rightthing
thing
Be
Beopen,
open,honest,
honest,and
andspeak
speakwith
with
Be
Be Credible
Credible one
oneconsistent
consistent voice
voice
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Benefits of Crisis Management
Fewer disruptions to every life for consumers,
employees, and citizens
Preparing for one type of crisis may be beneficial
when other types of crises strike
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Key Terms
Issues management Prodromal crisis stage
Crisis management Acute crisis stage
Portfolio approach Chronic crisis stage
Issue Crisis resolution stage
Emerging issue Crisis teams
Issues selling Crisis communications
Issues buying Ten steps of crisis
Probability-impact matrix communication
Issues development Being first
process
Crisis
Being right
Being credible
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